AMD is turning up the heat on Intel with officially announcing to buy leading graphics card maker ATI for about $5.4 billion. AMD also reduced prices on selected CPUs up to 60%.

So why is AMD buying ATI? Quote from the press-release provides some answers:
"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 configurations to transform processing technologies, with silicon-specific platforms that integrate microprocessors and graphics processors to address the growing need for general-purpose, media-centric, data-centric and graphic-centric performance." 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.
More details in this AMD press-release.

Regarding the new AMD CPU prices, the AMD Athlon 64 X2 4600+ is apparently now selling for $240 instead of $558 for instance. Most price cuts are for PC CPUs. Server and mobile CPUs are pretty much not affected.
More details about the new pricing can be found in this new official price list Via DailyTech.

AMD has a great timing with their positive news. Intel a couple days ago announced restructure plans and posted huge earning drops - more details. On the bright side < a href="http://biz.yahoo.com/bw/060724/20060724005397.html?.v=1">introduce the new Intel Core 2 Duo CPU line on July 27th.