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ATI to fortify manufacturing ties

The graphics chipmaker embarks on a new plan to boost its market share by working more closely with graphics board manufacturers.

Graphics chipmaker ATI Technologies is embarking on a new plan to boost its market share by working more closely with graphics board manufacturers.

The Markham, Ontario-based company, which will detail the new initiative next week at the Computex computer show in Taipei, Taiwan, said it intends to focus on signing more partnerships with graphics board makers in an effort to increase sales and worldwide distribution of its chip products.

The designer of graphics processors for desktop and mobile PCs said it has already formed agreements with manufacturers and plans to trumpet new partnerships at the show.

The plan comes as ATI battles financial challenges and wrestles with rivals for market share in a highly competitive sector.

The company has seen its fortunes dip amid strong competition from Nvidia, which recently unveiled its new GeForce3 chip. The GeForce 3 has garnered business from a number of top computer makers, including Apple Computer, a longtime ATI customer.

Until recently, ATI had a lock on the Macintosh market, but the company's share has slipped there, as well as in the PC market. Meanwhile, Nvidia appears to be ahead of the pack; it's one of the few technology companies of late to churn out strong earnings and to stick by forecasts for upcoming quarters.

The idea behind ATI's new strategy is to bolster its distribution channels to increase product adoption. The plan is intended to provide system integrators, retailers and distributors with a wide choice of suppliers of ATI desktop graphics chips.

Although the company is increasing direct manufacturer partnerships, it has no intention to stop selling to the retail market.

Last quarter, ATI edged past lowered estimates. The company's shares were hit hard in March after ATI warned of a loss amid a slowdown in its business.

ATI said second-quarter sales fell 39 percent compared with the same period last year and 27 percent for the first six months of fiscal 2001 as a result of the sluggish PC market. The sales decrease touched the company's entire line of graphics chips and cards.