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According to RBC Capital Markets, chip maker and Intel rival Advanced Micro Devices (AMD) may be looking to acquire graphics technology company ATI Technologies, which provides the GPUs for the Nintendo GameCube, the forthcoming Wii and Microsoft's Xbox 360.

Analyst Apjit Walia believes that the PC food chain dictates that such a buyout is likely to take place, as graphics companies are often thought to be acquisition targets for microprocessor companies.
"The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few-years," said Walia in a research note. "We believe ATI is a rare-buy in the semiconductor space right now given the near-term tie-up dynamics."

Rumors about an upcoming Amd bid to acquire chipset company and grphics chip develop AMD have resurfaced on Friday. According to an article published by globeandmail.com, AMD could make a friendly offer as early as next week. The website referred to sources, which suggested that AMD is considering a $5.6 billion takeover bid.

AMD today announced that it will acquire chipset and graphics chip company ATI in a deal that is valued at about $5.4 billion. AMD believes that, with the help of ATI's assets, it can build a new "more formidable" company that can grow especially in commercial, mobile and consumer electronics markets.

Following the rumors about a possible merger between AMD an ATI, Intel apparently pulled ATI's bus license. According to a brief article posted by the Inquirer just before the AMD/ATI news was announced, Intel may take taken this action already a few days ago.

In a conference call earlier today, AMD said that it would expect Intel to stop ordering ATI chipsets for its entry-level motherboards sometime in the future, but expressed hope that customers would continue to ask for ATI chipsets on Intel boards and force Intel into buying chips from its new rival.

With the acquisition of ATI, AMD will have all the pieces in place to evolve from a processor manufacturer into a platform company and go head to head with Intel in more markets - especially in the business desktop and notebook segments. But AMD claims that it is approach will be different from Intel and allow third-party firms - such as Nvidia - to access its platforms.

AMD and ATI: Will their technologies merge as well?