In a remarkable turnaround for this venerable 3D chipmaker, ATI Technologies has decided to follow NVIDIA's lead and licence their chips and board designs to third-party board makers (such as Creative Labs and Hercules) so these companies can produce their own products. This decision is a dual-edged sword, as while it will lower manufacturing costs and spread ATIs market share, it may erode sales of their own cards which they will continue to produce. This marks the move by all major 3D chipset makers to abandon the product model of 3dfx (one chip maker, one board maker) which may have resulted in that company's failure to return to profitability.

At this point it is not clear what this decision will mean for Macintosh users. Currently we have two sources of ATI chipsets -- ATI retail products (such as the Radeon Mac Edition AGP and PCI) and OEM cards supplied by Apple with current Cubes, G4 towers and portables. As the PC versions of ATI's graphics cards are not compatible with Mac systems, it seems to follow that ATI-based cards from a third party would also not be compatible. However, it is certainly possible for a card maker to create a Mac-specific or Mac/PC compatible card with ATI chips, which may mean lowered costs for Mac users.

Here's an excerpt from ATI's press release:

ATI Technologies Inc. (TSE: ATY, NASDAQ: ATYT), a world leader in graphics, video and multimedia solutions, today unveiled a new business strategy that will see the Company enter into manufacturing and distribution partnerships with leading original design manufacturers (ODMs) and add-in board manufacturers (AIBs) - a move that will significantly increase sales and distribution penetration of ATI chip technologies worldwide.

These partners will become the major suppliers of ATI technologies to system integrators (SIs) and distributors worldwide. ATI will continue to provide chips and board products to OEMs in the value, mainstream, high-end and workstation markets and will continue to support ATI branded products in the retail channel. The new strategy will be officially rolled out at Computex, one of the world's largest computer shows, held in Taipei from June 4 to 8, 2001.

``This is great news for our customers and partners worldwide, who now have multiple suppliers for ATI's industry-leading graphics acceleration technology,'' said David Orton, President & Chief Operating Officer, ATI Technologies Inc. ``The market has changed over the past year-and-a-half and it is now time for ATI to deepen its penetration into the system integrator and distribution markets through this new strategy.''

The new strategy will provide SIs, retailers and distributors with a wide choice of suppliers of ATI desktop graphics chips and a more competitive market, in general. Agreements have been reached with many ODM partners, with more partner announcements to be made at Computex.

``Our ODM partners are talented, agile and cost-effective companies, serving the most demanding high-volume customers you will find in the industry,'' said K.Y. Ho, Chairman and CEO, ATI Technologies Inc. ``ATI is the world's best-known brand of graphics processor and this is key to attracting top ODMs to incorporate our products and market them to PC vendors, system integrators and distributors.''

ATI will offer the full range of graphics technologies to its ODM and AIB partners, affording them a significant opportunity to increase sales, revenue and market share. Reaction from ODMs and AIBs has been positive, as they now have direct access to ATI products for their customers. ATI will enable them to get to market in a timely, high-quality fashion by providing a full range of reference designs, optimized software drivers on the web, and technical support.

ATI Press Release on Third-Party Chip Licenses

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