AMD to acquire ATI for $5.4 bn

DQW News Bureau

AMD and ATI announced plans to join forces in a transaction valued at
approximately $5.4 billion. The combination will create a processing power-house
by bringing AMD's technology leadership in microprocessors together with ATI's
strengths in graphics, chipsets and consumer electronics.

AMD's acquisition of ATI will position the new company to deliver
innovations that fulfill the increasing demand for more integrated solutions in
key market segments while also continuing to develop “best-of-breed”
discrete products that empower customers to choose the combination of
technologies that best serves their needs.

In 2008 and beyond, AMD aims to move beyond current technological
con-figurations to transform processing technologies, with silicon-specific
plat-forms that integrate micro-processors and graphics processors to address
the growing need for general-purpose, media-centric, data-centric and
graphic-centric performance. Thus, the combined company intends to empower its
customers to create their own unique products and solutions within an
open-innovation ecosystem free from artificial barriers to customer success.

“ATI shares our passion and complements our strengths: technology
leadership and customer centric innovation,” said Hector Ruiz, Chairman and
CEO, AMD.

Ramaratnam gets global responsibilities

Mukund Ramaratnam Advanced Micro Devices (AMD) India announced that Mukund Ramaratnam, who was leading the marketing team for AMD India, will be moving to the AMD, Inc headquarters in Sunnyvale, California to take on responsibilities in AMD's worldwide consumer sales and marketing team. His association with India will continue, as his new role involves consumer sales and marketing for India, China and South Asia regions. Ramaratnam took over as the Director for Marketing and Business Development in July 2004. He came to India along with Ajay Marathe, President, AMD India. Mukund's responsibilities were to build AMD's presence in India, grow market share across consumer and commercial segments, and prepare it for the next phase of growth, relying on his rich education and professional experience. His contribution to AMD India has also been to provide a strong foundation and build solid teams for the marketing and business development functions for AMD. Ramaratnam's responsibilities in marketing will transition to Deepanshu Sharma, who is currently the GM - Marketing, AMD India.

“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. 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,” Ruiz added.

Talking about the deal Dave Orton, President and CEO, ATI added, “This
combination means accelerated growth for ATI, and broader horizons for our
employees. All of our product lines will benefit. Joining with AMD will enable
us to innovate aggressively on the PC platform, and continue to invest
significantly in our consumer business to stay in front of our markets.”

Under the terms of the transaction, AMD will acquire all of the outstanding
common shares of ATI for a combination of $4.2 billion in cash and 57 million
shares of AMD common stock, based on the number of shares of ATI common stock
outstanding on July 21, 2006. All outstanding options and RSUs of ATI will be
assumed. Based upon the closing price of AMD common stock on July 21, 2006 of
$18.26 a share, the consideration for each outstanding share of ATI common stock
would be $20.47, comprised of $16.40 of cash and 0.2229 shares of AMD common
stock.

AMD anticipates it will finance the cash portion of the transaction with a
combination of cash and new debt. AMD has obtained a $2.5 billion term loan
commitment from Morgan Stanley Senior Funding Inc, which, together with combined
existing cash, cash equivalents, and short-term investments balances of
approximately $3 billion, provides full funding for the transaction.

AMD expects that the transaction will be slightly accretive to earnings in
2007, and meaningfully accretive in 2008, before the inclusion of ATI
acquisition-related charges, based upon AMD's plans to deliver more integrated
and advanced platform solutions and thereby improve its position in commercial
clients, mobile computing, gaming, media and emerging markets. AMD is also
anticipating that it will reduce operating expenses by approximately $75 million
for the combined company by the end of 2007.

The combined company would have achieved approximately $7.3 billion in total
consolidated sales during the last four quarters with a workforce of
approximately 15,000 employees. Headquartered in Sunnyvale, California, the
company will maintain sales, design and manufacturing centers worldwide and
major business centers in Silicon Valley, Austin, Texas and Markham, Ontario-all
valued centers of innovation for the combined company. AMD's current executive
team will be complemented by the addition of Dave Orton who will serve as an
Executive VP of the ATI Business Division, reporting to the AMD Office of the
CEO, comprised of Hector Ruiz and Dirk Meyer, President and COO. In addition,
under the terms of the acquisition agreement, two ATI directors will join AMD's
board of directors upon closing of the transaction.