AMD to buys ATI for $5.4 bn

NEW YORK

JULY 24, 2006

Advanced Micro
Devices (AMD) announced acquisition of ATI Technologies for approximately $5.4
billion in cash and stock.

The AMD-ATI
combination is expected to create a processing powerhouse by bringing AMD's
technology leadership in microprocessors together with ATI's strengths in
graphics, chipsets and consumer electronics.

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 $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 $3.0 billion,
provides full funding for the transaction.

ATI has received
an opinion from its financial advisors that the transaction from a financial
point of view is fair to its shareholders. The transaction was unanimously
approved by the board of directors of both the companies.

The transaction is
subject to ATI shareholder approval, Canadian court supervision of a Plan of
Arrangement, and other regulatory approvals including merger notification
filings in the United States, Canada and other jurisdictions, as well as
customary closing conditions.

In the event that
the transaction does not close, ATI has agreed to pay AMD a termination fee of
$162.0 million under circumstances specified in the acquisition agreement. The
transaction is expected to be completed in the fourth quarter of 2006.

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 anticipates
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 ATI president and CEO
Dave Orton.

Orton will serve
as an executive vice president of the ATI business division, reporting to the
AMD Office of the CEO, comprising chairman and CEO Hector Ruiz and president and
chief operating officer Dirk Meyer.

In addition, under
the terms of the acquisition agreement, two ATI directors will join AMD's
board of directors upon closing of the transaction.

The collective
roster of AMD and ATI's strong customer relationships represents a “who's
who” of the computing and consumer electronics industries.

Drawing upon a
shared culture of customer-centric innovation and engineering excellence, the
combined company will be well positioned to meet customer demand for more
innovative solutions, system-level engineering and faster time-to-market.