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Advanced Micro Devices on Wednesday completed its $5.4bn acquisition of graphics chip maker ATI Technologies of Canada and said it would produce “Fusion” – a new kind of processor that integrates graphics processing with a computer’s central calculating functions.

The news came as industry data showed larger rival Intel regaining market share with its latest processors, even though AMD had won its first orders from Dell.

AMD said the new combined company would have 15,000 employees and be a “processing powerhouse”.

Hector Ruiz, AMD chief executive, said: “In the near term, customers gain a new level of choice, and in the long term, we believe the possibilities for innovation are truly limitless.”

Currently, PCs rely on a central processing unit or CPU to drive most functions and a separate graphics chip or card to handle display data. AMD said it planned to make a new class of processor integrating AMD’s own CPU microprocessor with ATI’s GPU (graphics processing unit) at the basic silicon chip level.

The Fusion processors, which are expected by late 2008, would need less power and give greater performance, AMD said. “With the anticipated launch of Windows Vista, robust 3D graphics, digital media and device convergence are driving the need for greater performance, graphics capabilities and battery life,” said Phil Hester, AMD’s chief technology officer.

Intel introduced processors with two cores or brains over the summer, and this appears to have translated into market share gains, according to the industry research firm Mercury.

Intel’s share of the dominant “x86” microprocessor market grew from 73 per cent in the second quarter to 76 per cent in the third, according to Mercury data cited by analysts. AMD’s share increased from 22 per cent to 23 per cent, as Taiwan’s Via fell back.

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