Advanced Micro Devices Inc. on Monday agreed to buy ATI Technologies Inc. for $5.4 billion, a deal that will open a new front in AMD's rivalry with Intel Corp.
AMD said it will pay $4.2 billion in cash and 57 million of its own shares for ATI, a maker of graphics processors and so-called chipsets that support microprocessors, which are the brains of PCs.
The transaction will broaden AMD's revenue stream, letting it tap into more consumer electronic products, a fast growing part of the semiconductor market.
ATI's chips are used in computers, digital televisions, video-game consoles and cell phones. It sells its chips to among others, AMD and Intel, AMD's much-bigger rival for PC and server chips.
"This combination offers AMD a broader and stronger product line in its competition with Intel," RBC Capital Markets analyst Steve Arthur said in a research note.