AMD Plans Combined Processor-Graphics Chip

AMD announced its so-called Fusion program Wednesday (Oct. 25) upon the formal completion of its $5.4 billion acquisition of graphics and chip set designer ATI Technologies Inc. The merged company will ship versions of the combined processors for laptops, desktops, workstations, servers and consumer electronics devices geared for emerging markets.

The move could potentially give upstart AMD an edge over its much larger rival, particularly in a handful of generally small but potentially profitable sectors such as high-end consumer gaming machines, low-end consumer desktops and some technical computing environments. However, even with the ambitious merger AMD still trails Intel by far in terms of its overall revenue, profit and staff resources to address mainstream computing markets.

The Fusion chips aim to increase performance-per-Watt for applications such as 3D graphics, digital media and technical computing. In a press statement, AMD suggested the processors will leverage both its coherent HyperTransport interconnect as well as PCI Express to link to external co-processors.

The Fusion plan could give AMD a lead in delivering multi-core products using different kinds of processing blocks. Today, Intel and AMD are in a neck-and-neck battle to deliver CPUs with two and four x86 cores per chip.

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"In this increasingly diverse x86 computing environment, simply adding more CPU cores to a baseline architecture will not be enough," said Phil Hester, AMD senior vice president and chief technology officer, in a prepared statement. "As x86 scales from palmtops to PetaFlops, modular processor designs leveraging both CPU and GPU compute capabilities will be essential in meeting the requirements of computing in 2008 and beyond," he added.

Intel has provided so-called north bridge chip sets for years that merge memory controllers and its own in-house designed graphics accelerators, but it has not delivered or publicly discussed plans for a merged CPU/graphics processor. Intel canceled plans for a low-end, all-in-one processor, dubbed Timna, several years ago. The x86 giant has generally had generally lackluster market success with integrated CPUs it delivered in the 1990s for mobile systems.

Intel's internally design graphics accelerators aim at generally low-end graphics capabilities for mainstream markets. Competitors such as Via Technologies have fielded merged CPU/graphics combinations for entry-level systems, chips that also have generally saw little market adoption.

AMD could take a different tack by using in its Fusion products ATI's broader range of high-end graphics accelerator cores. Such combined chips could attack high-end PCs for consumer gaming or technical computing, machines which typically use multiple graphics adapter cards today.

Intel would not be likely to respond immediately to the AMD moves. The larger rival is in the middle of a cost cutting phase, pairing employees back from 102,000 to about 92,000 over the next year. Intel said it will not cut products or programs in its core computing markets due to the cutbacks. However, in this climate, Intel would be unlikely to start new initiatives for relatively narrow markets such as the AMD's Fusion chips are likely to address. Separately, AMD re-iterated it's plans to combine the merged companies' chips to release in 2007 a range of PC system-level designs covering business, consumer and mobile systems. AMD and ATI are setting up merged engineering teams in Taipei and Shanghai to handle the development and support of the new platforms.

The system level work will help AMD catch up with archrival Intel Corp. that has been delivering full OEM "platforms" based on its CPUs for several years. Under Intel chief executive Paul Otellini, Intel has accelerated its plans to bake its processors into a wide range of system-level designs such as the highly successful Centrino laptops that include other Intel-designed chips and software.

AMD does not yet have an optimized system-level design for notebook computers, but it said that will be one focus of its new platform work of the merged company. It does already have a consumer platform called AMD Live that competes directly with Intel's Viiv consumer desktop platform.

Despite AMD's ambitious merger it still trails Intel by far in all key areas.

The combined AMD/ATI could in 2006 have annual revenues of about $7.6 billion, profits of about $680 million, R&D expenditures of about $1.4 billion and about 14,900 employees. By contrast Intel had 2005 revenues of $38.8 billion, profits of $8.6 billion, R&D expenditures of $5.1 billion and more than 100,000 people.

In a presentation for financial analysts, AMD said the merger could give it the headroom to grow to a $40 billion in annual revenues.

AMD marshaled statements from a wide range of partners and customers—including Microsoft, ATI archrival NVidia, Dell, Hewlett-Packard and Lenovo—supporting the merger with ATI.

"We are excited by the potential benefits that this union can bring to enhance the Windows Vista experience," said Jim Allchin, co-president of Microsoft's platforms and services division, in a prepared statement.

"The combination of these companies should help the industry deliver richer computing platforms to enterprises and consumers around the world," said Shane Robison, HP's chief strategy and technology officer.