Nvidia on ATI: "basically throwing in the towel"

It seems that graphics powerhouse Nvidia is reacting rather well to news of AMD scooping ATI off the corporate shelf and filling in coupons to the value of $5.4 billion at the checkout counter. Speaking to BusinessWeek Online, Nvidia CEO Jen-Hsun Huang described the purchase as a "gift", presumably whilst reclining in a henhouse, sipping cocktails and counting objects of some kind. He went on to say that ATI was "throwing in the towel, leaving us as the only stand-alone (graphics chip) company in the world." Of course, not being a stand-alone graphics chip company hasn't stopped Intel from competing in that market, so perhaps winning the "who can be the last stand-alone company" competition isn't all that important.

More importance can be found in the repercussions of such a large purchase. There are concerns that AMD's debt-to-capital ratio might take a turn for the worse after the company took out a $2.5 billion term loan to cover some of the purchase. Intel and Nvidia's chummy relationship may also prove to be a stumbling block should ATI's graphics chips ever be locked out of Intel machines. Still, AMD cautiously considers the potential benefits, such as major cost reductions and an entry point into the Intel-dominated laptop arena, to be worth the price and effort.

Mr. Huang's expectations may turn out to be accurate in the long run, but in an industry that was once ruled by 3dfx Interactive (remember Glide?), anything can happen.

This article was originally published on Joystiq.