It would not have been that much more expensive for AMD to make a such an acquisition and it was very close to happening at one point.
AMD was looking to buy either Nvidia or ATI since late 2005 and finally made the decision to acquire ATI very early in Q2 2006. It was one of the best-guarded secrets to date. It also became the largest semiconductor takeover ever.
We haven't yet learned specifically why AMD finally went with ATI but Nvidia would have been a good choice as well, as it makes a good chipset, something that AMD desperately needed.
Where once there may have stood AMDVIDIA there now stands DAAMIT. Now that's something. µ
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