AMD Completes ATI Acquisition and Creates Processing Powerhouse

SUNNYVALE, CALIF. – Oct. 25, 2006 – AMD (NYSE:AMD) today announced the completion of its approximately $5.4 billion acquisition of ATI Technologies Inc. Combining the complementary strengths of the two technology leaders, the new AMD opens for business as a processing powerhouse committed to driving innovation, choice and growth in the technology industry. With approximately 15,000 employees, the company merges AMD’s technology leadership in microprocessors together with ATI’s leadership in graphics, chipsets and consumer electronics. “Today marks a historic day for our employees, our partners and our customers as we officially welcome ATI into the AMD family,” said AMD Chairman and CEO Hector Ruiz. “On day one, we are delivering a winning set of complementary technologies, igniting a new level of innovation and continuing to champion choice for the industry. Thanks to the strength of our talented employees, the new AMD now has a full range of intellectual property (IP) in microprocessors, graphics, chipsets and
consumer electronics to deliver open platforms and integrated solutions. In the near term, customers gain a new level of choice, and in the long term, we believe the possibilities for innovation are truly limitless.”

Transaction Details

Under the terms of the transaction, AMD acquired all of the outstanding
common shares of ATI for a combination of approximately $4.3 billion in
cash and 58 million shares of AMD common stock, based on the number of
shares of ATI common stock outstanding on October 24, 2006. All
outstanding options and restricted stock units (RSUs) of ATI were
assumed. The value of the ATI acquisition of approximately $5.4 billion
is based upon the closing stock price of AMD common stock on October 24,
2006 of $20.32 per share and excludes the value of assumed equity
awards.

AMD financed the cash portion of the transaction with a combination of
cash and new debt. AMD obtained a $2.5 billion term loan from Morgan
Stanley Senior Funding, Inc., which, together with combined existing
cash, cash equivalents, and marketable securities balances of
approximately $1.8 billion, provided full funding for the transaction.
AMD announced the final pro-ration applicable to ATI common shares in
the acquisition. The total consideration to be paid for each common
share, based on the Parent Closing Stock Price (as defined in the Plan
of Arrangement, as amended), is approximately $21.36. The final election
results indicate that pro-ration is as follows:

• ATI shareholders who elected to receive cash will be entitled to
  receive, for each common share for which a valid cash election was made,
  approximately US $18.59 in cash plus approximately 0.1245 of a share of
  AMD common stock;
• ATI shareholders who elected to receive stock will be entitled
  to receive, for each common share for which a valid stock election was
  made, 0.9596 of a share of AMD common stock; and
• ATI shareholders who did not make a valid election will be
  entitled to receive, for each share for which no valid election was
  made, 0.9596 of a share of AMD common stock.
• Pro-ration was necessary because the cash consideration elected to be
  received exceeded the amount of cash available in the acquisition. Any
  fractional shares will be paid in cash.

Planning to Deliver Integrated Platforms in 2007

Customers should benefit from AMD’s and ATI’s combined platform
development and technical support teams, which will be co-located in
Taipei and Shanghai. Combined with
the existing Austin and Toronto locations, these sites offer research
and development and support to provide customers with a complete
solution for optimized platform development.

AMD plans to deliver a range of integrated platforms in 2007 to serve
key markets, including: commercial clients; mobile computing; and gaming
and media computing. PC users will benefit from innovations intended to
extend battery life on the next-generation AMD Turion(tm) 64 mobile
technology-based platform and enhancements to the AMD LIVE!(tm) digital
media PC platform that will enable users to get more from their favorite
photos, music, and movies. AMD believes that these integrated platform
innovations will bring customers improved system stability, better
time-to-market, increased performance and energy-efficiency and overall,
an enhanced user experience.

“By driving innovation and integration in processing, especially in
graphics, the new AMD has the potential to empower breakthrough
computing experiences for users of Windows(r) Vista,(tm)” said Jim
Allchin, Co-President of Microsoft’s Platforms & Services Division. “We
are excited by the potential benefits that this union can bring to
enhance the Windows Vista experience.”

AMD also sees an opportunity to deliver processing solutions to the
growing consumer electronics market. The company intends to leverage
ATI’s strength in the consumer market by pursuing new opportunities to
invest in the consumer electronics and high-end discrete graphics
markets. With leading technology and customer relationships, AMD is
positioned to address digital convergence by leveraging critical IP to
create new innovations and devices that facilitate end-to-end content
delivery and connectivity to improve end-user experiences.

CPU/GPU Silicon “Fusion” – Another Industry First for Customers
AMD plans to create a new class of x86 processor that integrates the
central processing unit (CPU) and graphics processing unit (GPU) at the
silicon level with a broad set of design initiatives collectively
codenamed “Fusion.” AMD intends to design Fusion processors to provide
step-function increases in performance-per-watt relative to today’s
CPU-only architectures, and to provide the best customer experience in a
world increasingly reliant upon 3D graphics, digital media and
high-performance computing.

With Fusion processors, AMD will continue to promote an open platform
and encourage companies throughout the ecosystem to create innovative
new co-processing solutions aimed at further optimizing specific
workloads. AMD-powered Fusion platforms will continue to fully support
high-end discrete graphics, physics accelerators, and other PCI
Express-based solutions to meet the ever-increasing needs of the most
demanding
enthusiast end-users.

“With the anticipated launch of Windows Vista, robust 3D graphics,
digital media and device convergence are driving the need for greater
performance, graphics capabilities, and battery life,” said Phil Hester,
AMD senior vice president and chief technology officer. “In this
increasingly diverse x86 computing environment, simply adding more CPU
cores to a baseline architecture will not be enough. As x86 scales from
palmtops to petaFLOPS, modular processor designs leveraging both CPU and
GPU compute capabilities will be essential in meeting the requirements
of computing in 2008 and beyond.”

Fusion processors are expected in late 2008/early 2009, and the company
expects to use them within all of the company’s priority computing
categories, including laptops, desktops, workstations and servers, as
well as in consumer electronics and solutions tailored for the unique
needs of emerging markets.