AMD and ATI today announced plans to join forces in a transaction valued at
approximately $ 5.4 billion. The combination will create a processing
powerhouse by bringing AMD’s technology leadership in microprocessors
together with ATI’s strengths in graphics, chipsets and consumer
electronics. The result: A new and more formidable company, determined to
drive growth, innovation and choice for its customers, particularly in the
commercial and mobile computing segments and in the rapidly-growing consumer
electronics market. 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.

AMD and ATI today announced plans to join forces in a transaction valued at
approximately $ 5.4 billion. The combination will create a processing
powerhouse by bringing AMD’s technology leadership in microprocessors
together with ATI’s strengths in graphics, chipsets and consumer
electronics. The result: A new and more formidable company, determined to
drive growth, innovation and choice for its customers, particularly in the
commercial and mobile computing segments and in the rapidly-growing consumer
electronics market. Combining technologies, people, and complementary
strengths, AMD plans to deliver in 2007 customer-centric platforms for the
benefit of customers who want to collaborate in the development of
differentiated solutions.

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. Thus, the combined company intends to empower
its customers to create their own unique products and solutions within an
open-innovation ecosystem free from artificial barriers to customer success.

“ATI shares our passion and complements our strengths: technology
leadership and customer centric innovation,” said AMD Chairman and CEO
Hector Ruiz. “Bringing these two great companies together will allow us to
transcend what we have accomplished as individual businesses and reinvent
our industry as the technology leader and partner of choice. We believe AMD
and ATI will drive growth and innovation for the entire industry, enabling
our partners to create differentiated solutions and empowering our customers
to choose what is best for them.”

“This combination means accelerated growth for ATI, and broader horizons
for our employees,” said Dave Orton, President and CEO of ATI. “All of our
product lines will benefit. Joining with AMD will enable us to innovate
aggressively on the PC platform, and continue to invest significantly in our
consumer business to stay in front of our markets. Windows Vista will deliver incredible advances in the user experience as a result of advancements in graphics integration and performance,” said Jim Allchin, Co-President of Microsoft’s Platforms & Services Division. “We’re excited by the potential of what AMD and ATI can deliver together to enhance the Windows Vista experience for our customers even further.”

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 of $ 16.40 of cash and
0.2229 shares of AMD common stock.