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Would Nvidia Buy AMD?

Despite last week’s investment from Abu Dhabi, there is a growing belief on the Street that something more dramatic may need to happen to save Advanced Micro Devices (AMD). Douglas McIntyre, of the 24/7 Wall Street blog, asserts that AMD needs to find a buyer - and that Nvidia (NVDA) “may be only one company that makes sense.”

McIntyre said that buying AMD would help Nvidia protect a large part of its market: the company is the largest supplier of AMD 64 graphics chipsets, a 62% share in the second quarter. He says that “one of the strongest arguments against a Nvidia/AMD deal is that it could harm the graphics chip maker’s relationship with Intel (INTC).” But he thinks a stronger competitor may be preferable to Intel than the disappearance of AMD entirely. “Without a strong competitor, it could face future antitrust actions. And, having another robust player in the market has helped Intel drive its R&D operations harder to stay ahead. The entire market has benefited from that.”

Barrons

Posted by | Tue, Nov 20, 2007 - 07:32 AM