AMD Plans New Class
Of Multifunction Chips by '09
By DON CLARK
October 25, 2006; Page B2
Advanced Micro Devices Inc., which is expected to close its $5.4 billion purchase of ATI Technologies Inc. today, is predicting it will bring a new breed of multifunction chips to market by early 2009.
Executives of the two companies vow to design chips -- under a program dubbed Fusion -- that combine the calculating power of AMD microprocessors with accessory chips from ATI, including graphics components that draw three-dimensional characters and scenery in game software. Those product categories have long been separate, but the market is changing rapidly, they say.
One force is personal-computer demand from emerging countries, where price is paramount and fewer chips can lower costs. Another is a shift in buying patterns toward portable machines; combining graphics with microprocessors can help reduce power consumption as well as price in laptops, cellphones and other hand-held gadgets, said Phil Hester, AMD's chief technology officer.
Still another factor driving chip combinations is sophisticated software that demands better graphics -- including Microsoft Corp.'s Windows Vista, due to start arriving for business users this month. "The debate is not going to be whether a device has graphics," Mr. Hester said. "It's just going to be how much and how much does it cost."
Dave Orton, ATI's chief executive, predicted microprocessors with graphics initially could help bring PC prices to between $100 and $200, down from $400 or so. Eventually, the trend might also increase performance; a business-oriented computer might use a chip that features a single graphics processor and several microprocessors, Mr. Hester predicted, while a game machine might have a couple of microprocessors and eight graphics processors.
David Tuhy, general manager of desktop products at AMD rival Intel Corp., said it has long studied adding graphics to microprocessors. "It makes sense. It will happen," he said.
It is less clear how soon such chips will come, and how far they will spread. In the meantime, AMD, based in Sunnyvale, Calif., and ATI of Thornhill, Ontario, face challenges in keeping customers and partners happy.
ATI is best known for the chips inside accessory graphics cards that gamers plug into high-end PCs, a field where it competes fiercely with Nvidia Corp. Both companies also make graphics chips for other kinds of gadgets, as well as accessory products called chip sets that handle other housekeeping chores alongside microprocessors.
Intel, the biggest maker of microprocessors, also is the biggest supplier of chip sets. It has put additional pressure on ATI and Nvidia by adding graphic capabilities to its chip sets, reducing demand for separate graphics chips.
ATI also sells chip sets combined with graphics. Combining those products with AMD microprocessors and new software could help drive up average battery life on notebook computers from four hours or so to 5.5 hours, Mr. Orton said.
There are downsides to the AMD-ATI combination, too. ATI's sales of chip sets that work with Intel microprocessors have taken a hit, reflecting skepticism about AMD's commitment to products that essentially help Intel, notes analyst Dean McCarron of Mercury Research.
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