AMD acquires ATI and drops prices

AMD acquires ATI and drops prices - AMD acquires ATI and drops prices.

Big AMD news today.

First, AMD has announced that it is to buy ATI This price cut still leaves the FX-62 vastly overpricedin a deal that will cost them $5.4 billion ($4.2 billion cash, $1.2 billion stock).  This confirmation comes after weeks of rumor and speculation that the two companies were to merge.

What does this mean for AMD?  This deal give them access to the growing cellphone and handheld devices market, a market that's currently far more buoyant than the PC market.  This announcement might also mean that as a consequence NVIDIA will pursue the Intel market more vigorously and maybe even cut back on AMD components.

Also, AMD has announced price cuts for many CPUs.  Notably, the Athlon 64 FX-62 is down to $827 and the Athlon 64 X2 5000+ down to £310.  At the same time AMD announced that the Athlon 64 X2 4400+ and 4800+ for both Socket 939 and AM2 have been discontinued.    This price cut still leaves the FX-62 vastly overpriced, while bringing the price of the X2 5000+ to something more comparable to the Intel E6600 Core 2 Duo.  The main advantage that AMD now has is that the prices of motherboards for their CPUs are going to be far lower than those for Core 2 Duo CPUs, offering AMD CPUs a temporary advantage over Intel's Core 2 Duo.

It's pretty clear that what AMD are hoping to achieve with these price cuts it to distract user attention away from power and concentrate instead on price.  That is, apart from the FX-62 - I'm really not sure who AMD hopes will buy these insanely overpriced processors.  It would have taken a far more ruthless price cut to bring this CPU down to a competitive level and it seems that AMD have not been able to juggle the numbers in such a way that would allow this to happen.  My prediction is that AMD will have to a find way to cut the price of the FX-62 by maybe up to 50% again to make it competitive, or drop it from the line-up altogether.

The FX-62 aside, one thing is for sure - it summer bargains galore for buyers!