Today, AMD and ATI announced a plan to join forces, in a transaction that will combine AMD's technology leadership in microprocessors with ATI's strengths in graphics, chipsets and consumer electronics.

The combined company will operate as AMD and will be headquartered in Sunnyvale, CA., with a joint workforce of approximately 14,900 employees. The transaction, valued at US $5.4 billion, is expected to close in Q4 2006 subject to approval by ATI shareholders, court approval, regulatory approvals and other customary closing conditions.

Without a doubt this will have a tremendous impact on products to come by the new jointly formed company, as well as our own buying decisions and choices. AMD and ATI are not only leaders in mainstream and corporate computing, but some of the largest providers of products to the enthusiast market.

With the acquisition, AMD will gain ground in the graphics and chipsets markets, which they hope will let them compete more directly with Intel and the platforms they have touted over the past few years with success (Centrino, etc.):

Q: What can you accomplish with this deal that you couldn't with your former strategy?
A: With this acquisition, AMD will be well positioned to drive a unified platform and solution vision to keep pace with media and data processing innovations, with a presence in the consumer digital media market.

Finally, the last bit of news that has come as a result of this merger is that Intel will be pulling (or at least not renewing) ATI's bus license that let them make chipsets for Intel platforms. Not a big surprise there, just don't expect many ATI/AMD chipsets for Intel processors after this year.

If you want to learn more details about this merger, AMD has posted a lot of information on its website.