Column: ATI and the big picture

Here’s a column I posted at globeandmail.com about ATI:

“By now, anyone who follows the computer-graphics chip market — which is effectively a triumvirate made up of Toronto’s ATI Technologies, U.S-based Nvidia Corp. and computer-chip giant Intel — knows that it can be a roller-coaster of a business. Since both ATI and Nvidia are constantly coming out with newer leading-edge chips, who is on top can change rapidly. In one quarter, ATI will have the hottest chip (which in turn usually commands the highest profit margins) and Nvidia will be playing catch-up; a couple of quarters later, the positions will often be reversed.

Last year, for example, Nvidia was the one who was late to market with a competing chip, and ATI was getting all the glory. Now, ATI looks like it is behind the eight ball on the high end of the graphics market and its margins are suffering as a result, which led to the company’s latest sales and profit warning. Meanwhile, Intel is hammering away at the lower end of the market — “integrated� chips used in laptops and desktops — which has been one of ATI’s core businesses. And since newer chips come out so frequently, older products have little longevity, which means they have to be discounted heavily just to get them out the door. Continue reading