[via BetaNews]

For one time, I think that this merge deal makes sense, from an industrial and customer-offering points of view. Great.

AMD confirmed rumors Monday and said it was merging with graphics chipmaker ATI in a transaction worth $5.4 billion. The first computer systems that would take advantage of the strengths of the combined company will begin appearing in 2007, the company said.

The merger will allow AMD to offer integrated processor and graphics solutions to its customers. By 2008, AMD plans to introduce new processor configurations that would integrate the CPU and graphics processor into a single unit. The end result will be smaller, more powerful computers. […]

The transaction also carries financial benefit: while positive impact would be limited next year, by 2008 AMD expects it to have a noticeable impact on its bottom line. Combining the two companies would save as much as $75 million in operating expenses.

ATI CEO Dave Orton will now serve as executive vice president of the ATI division. Two ATI directors would join AMD’s board of directors after the merger closes.