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AMD and ATI join forces

AMD and ATI join forces

We always believed the Dell/Alienware rumors, even when the rest of the blogosphere laughed. It turned out we were right, of course. But when rumors about an AMD/ATI merger started to pop up recently, even we didn't buy it--especially after the online zeitgeist turned against it almost immediately, and everyone declared that the deal, if ever seriously contemplated, was dead.

So, imagine our surprise this morning to find that chipmaker AMD announced plans to buy video card company ATI for $5.4 billion. Of course, this is all pending regulatory approval, but it should be a done deal by Q4 2006. ATI shares jumped on the news, but AMD shares fell, with some investors thinking the company had overvalued ATI.

AMD says, via press release, "The result is a processing powerhouse: a new competitor, better equipped to drive growth, innovation, and choice for its customers in commercial and mobile computing segments and in rapidly-growing consumer electronics segments."

In the short term, consumers should not expect a major difference in the way they shop for CPUs or video cards. We expect that AMD-based systems should continue to support products from rival video card maker Nvidia.

Amusingly enough, we had some of the gang from ATI here in CNET's New York offices on Friday, showing off some new hardware. We'd like to say they spilled the beans early and swore us to secrecy, but they kept their poker faces on (if they even knew anything about the deal). We have another previously scheduled meeting later today with a different group from ATI, and we'll see what they have to say, post-announcement.