Chip Giants Merge

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Semiconductor manufacturer Advanced Micro Devices of Sunnyvale, Calif. is acquiring Canadian firm ATI Technologies, which makes graphics cards for PCs and tuner chips for cable set-tops and digital television sets, for $4.2 billion in cash and AMD stock worth another $1.2 billion. The deal positions AMD, which is Intel's chief competitor in the semiconductor market, as a much bigger player in multimedia devices and consumer electronics products.

AMD says it will focus on building integrated solutions that incorporate ATI's graphics processing technologies. The combined company will have roughly $7.3 billion in annual revenues and about 15,000 employees.

“Bringing these two great companies together will allow us to transcend what we have accomplished as individual businesses and reinvent our industry as the technology leader and partner of choice," said AMD Chairman and CEO Hector Ruiz in a statement. "We believe AMD and ATI will drive growth and innovation for the entire industry, enabling our partners to create differentiated solutions and empowering our customers to choose what is best for them.”

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