Our Thoughts: The GPU Side

The AMD/ATI acquisition doesn’t make a whole lot of sense on the discrete graphics side if you view the evolution of PC graphics as something that will continue to keep the CPU and the GPU separate.  If you look at things from another angle, one that isn’t too far fetched we might add, the acquisition is extremely important. 

Some game developers have been predicting for quite some time that CPUs and GPUs were on this crash course and would eventually be merged into a single device.  The idea is that GPUs strive, with each generation, to become more general purpose and more programmable; in essence, with each GPU generation ATI and NVIDIA take one more step to being CPU manufacturers.  Obviously the GPU is still geared towards running 3D games rather than Microsoft Word, but the idea is that at some point, the GPU will become general purpose enough that it may start encroaching into the territory of the CPU makers or better yet, it may become general purpose enough that AMD and Intel want to make their own.

It’s tough to say if and when this convergence between the CPU and GPU would happen, but if it did and you were in ATI’s position, you’d probably want to be allied with a CPU maker in order to have some hope of staying alive.  The 3D revolution killed off basically all giants in the graphics industry and spawned new ones, two of which we’re talking about today.  What ATI is hoping to gain from this acquisition is protection from being killed off if the CPU and GPU do go through a merger of sorts. 


The NVIDIA GeForce 256 was NVIDIA's first "GPU", offloading T&L from the CPU. Who knows what the term GPU will mean in 5 years, will it be a fully contained within today's CPUs?

ATI and NVIDIA both seem to believe that within the next 2 - 3 years, Intel will release its own GPU and in a greater sense than their current mediocre integrated graphics.  Since Intel technically has the largest share of the graphics market thanks to their integrated graphics, it wouldn’t be too difficult for them to take a large chunk of the rest of the market -- assuming Intel can produce a good GPU.  Furthermore, if GPUs do become general purpose enough that Intel will actually be able to leverage much of its expertise in designing general purpose processors, then the possibility of Intel producing a good GPU isn’t too far fetched. 

If you talk to Intel, it's business as usual.  GPU design isn’t really a top priority and on the surface everything appears to be the same.  However, a lot can happen in two years -- two years ago NetBurst was still the design of the future from Intel.  Only time will tell if the doomsday scenario that the GPU makers are talking about will come true. 

Our Thoughts: Will AMD manufacture ATI GPUs? Final Words
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  • Zebo - Wednesday, August 2, 2006 - link

    No worries...AMD runs a tight, efficient company that is accustomed to surviving
    through very hard times. AMD survived for a long time making chips that were cheap and almost as powerful as Intel's best. If they have to fall back to that business model to survive, they will. I personally loved those days of $40-$80 chips. But that's not realistic considering where AMD has been, their name and market presence currently, products on the table.. AMD is a mainstream player now with good reputation and large OEM's building thier boxes with them. They aint going anywhere.
    Reply
  • poohbear - Wednesday, August 2, 2006 - link

    so if the deal goes through, will the ATI brand name disappear? will we see AMD graphics cards instead of ATI graphics cards? Reply
  • Sunrise089 - Wednesday, August 2, 2006 - link

    IMHO there would be no reason to abandon the second most valuable GPU name. When Ford bought Aston Marton they didn't suddenly rename the products things like Ford DB7. Reply
  • erwos - Wednesday, August 2, 2006 - link

    Let me toss out a few random thoughts. I'm more of an economist than a businessman, but I took enough banking and finance to know enough to hurt myself.

    Almost all huge corporate mergers are not huge successes. Indeed, most of them tend to be failures unless the businesses are _very_ similar (gold mining company A buys out gold mining company B). My favorite example is Novell buying out SuSE and Ximian - everyone's doing operating systems, yet the best you can say was that it wasn't a complete failure. Certainly, the promised benefits haven't really emerged. Another good example is AOL and Time Warner.

    The bad news here is that ATI and AMD are in two different sections of the industry, and that for the proposed benefits of this merger to work, they're going to have to integrate very tightly. To make things worse, the benefits of integration aren't all that clear. GPU on a CPU? Who's been asking for that? It has certain implications for the embedded market (think Geode and system on a chip applications), but they hardly needed to buy a company the size of ATI to accomplish that particular goal. And it couldn't be to hand ATI the better fabs, either - as Anand pointed out, AMD isn't going to have any extra fab space in the medium-term outlook.

    My prediction: ATI-AMD will spend the next 9 months after the merger at _vastly_ decreased efficiency. Intel and nVidia will both be able to exploit this and take definitive leads in technology, at least for a while. In the long-term, ATI-AMD's dedication to high-end GPUs will fade, because the former-AMD executives running the company have absolutely no experience in the field. I am pessimistic, because, unfortunately, that is the historical truth.

    Personally, I think that if GPU on a CPU becomes the prevailing way to go, nVidia will just buy out VIA or Transmeta. And they'll probably have just the same problems as ATI and AMD will have, too... But there's no reason to toss those problems on yourself until you have to, and there was no really compelling reason for AMD to buy ATI at this moment in time.
    Reply
  • Kim Leo - Wednesday, August 2, 2006 - link

    what are you talking about? ok its fine to comparte other situation like this, but AMD didnt buy ATI just for the "intergrated graphics in CPU" idea and even though Hector Ruiz dosn't have too much experience in this sector but ATI's CEO who will still be there does, and i don't think that AMD won't listen to what he has to say about it. I think this will be great, AMD and ATI will both benefit from this, they both get technologies that can be used in their own products Reply
  • erwos - Wednesday, August 2, 2006 - link

    There aren't two CEOs. There's one, and his name is Hector Ruiz. At best, ATI's CEO will get pushed into director of the graphics division. More to the point, AMD's the much bigger company, and it's more likely their corporate culture is going to dominate ATI's. ATI's CEO's opinion will matter, but it's not going to sway AMD like it did/does ATI.

    If the plan isn't to integrate GPUs on CPUs, what other benefit was there to acquiring ATI? What techologies is ATI going to give AMD, and vica versa?

    -Erwos
    Reply
  • Sunrise089 - Wednesday, August 2, 2006 - link

    Couldn't the desire to purchase a healthy company with a high profit margin in a fast growing industry be a benefit? I think everyone is too focused on integration in the short term. AMD had $$$, $$$ is there to spend or invest, and if the bean-counters at AMD think the ROI for buying ATI is higher than investing in a new fab or whatever than they make that decision. Reply
  • JarredWalton - Wednesday, August 2, 2006 - link

    The major benefit seems to be AMD getting a company with a reasonable chipset business, and they can work that to create better business platforms, thus helping to penetrate the lucrative business sector. Except, penetrating the business sector is extremely difficult, especially the corporate world. "Buy Intel and Dell" is the standard decision, and even if Dell isn't picked, almost all businesses buy Intel systems. They did this all through the "NetBurst failure", so why would they change now that Intel has a good chip again (Core 2)? Reply
  • yacoub - Wednesday, August 2, 2006 - link

    So will we see a reference cooler design on future ATI cards that is less noisy than the silly thing on the X1800/X1900 series? ;P Reply
  • jones377 - Wednesday, August 2, 2006 - link

    In Q106 the marketshare breakdown for all x86 chipsets were as follows....

    Intel 57%
    VIA 15%
    ATI 12%
    Nvidia 9%
    SiS 6%

    http://www.xbitlabs.com/news/chipsets/display/2006...">http://www.xbitlabs.com/news/chipsets/display/2006...

    Different breakdown for Intel and AMD platforms. Basically Nvidia has almost no share in the Intel platform market while ATI sells in both.
    Reply

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