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ATI confirms $400m ArtX takeover

Deal done with Nintendo blessing

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ATI has confirmed its $400 million acquisition of (smaller) rival graphics chip developer ArtX. Details of the deal were covered by The Register last month, but to recap, it's not a cash exchange - ATI is swapping ArtX stock for $400 million-worth of its own shares. As we noted previously, the deal makes a lot of sense for ATI, which is keen to expand both its OEM sales and to push into the emerging information appliance market. ArtX has strong business ties with both Matsushita and Acer, with whom it's integrating high-performance graphics facilities with the latter's North Bridge chip-set technology (see Acer Labs to build GeForce 256 killer into North Bridge). That kind of integration reduces the cost of a system's silicon, which makes it ideal for low-price platforms like budget PCs and Net appliances. ATI has been pursuing similar goals itself ever since it acquired media processor and system-on-a-chip design Chromatic Research back in 1998. ArtX's highest profile partner, however, is Nintendo. It's already working on the graphics engine for console vendor's next-generation, PowerPC-based machine, Dolphin. ArtX was founded in September 1997 by a handful of guys from SGI who had worked on the graphics engine for the MIPS-based Nintendo N64, which launched in 1996. Soon after ArtX was formed, SGI cried foul and launched a lawsuit against the company and its principals. Nintendo began to get cold feet over MIPS late 1997 when the SGI CEO Ed McCracken quit. At the time, company sources told US newswires it was unsure of SGI's commitment to low-cost CPUs and was considering alternatives. Other sources said ArtX was tipped to take over development duties from SGI, and that rumour may well have persuaded SGI to prime its legal team for action. However, the suit never came to court - SGI dropped it in May 1998, without prejudice, and without any form of financial settlement or blame assigned to either party. Ex-SGI insiders, however, allege it was dropped so as not to intimidate Nintendo. Certainly, Nintendo announced its decision to use ArtX technology in its next-generation console, now known as Dolphin, and that ArtX would be instrumental in the selection of a CPU for the new machine during the week that SGI said it had killed the lawsuit. Clearly, Nintendo's patronage counts for a lot these days, so it's just as well Nintendo boss Hiroshi Yamauchi was on hand to give the ATI/ArtX wedding his blessing and benediction. ® Related Stories NEC to build chip fab to service $2.8bn Nintendo Dolphin deal Nintendo deal could mean big PowerPC presence in home

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