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The startup that saved ATI

Discussion in 'ATI' started by parallax-scroll, Sep 14, 2012.

  1. The startup that saved ATI
    Rick Merritt
    4/21/2003 11:06 AM EDT

    No one expects that ATI Technologies Inc. (Markham, Ontario) will
    drive graphics king Nvidia Corp. completely off its pedestal. But the
    scrappy No. 2 player in 3-D chips for PCs is staging a comeback of
    sorts, at a time when computer graphics are making an architectural
    shift to programmability and a market shift to integrated parts.

    Over the past couple of years, ATI has overhauled itself with
    management and engineering prowess from acquisition ArtX. Now, most
    observers expect it will re-emerge as Nvidia's equal, helping set the
    pace in both PCs and game consoles as a maturing graphics industry
    heads into what many say will be uncharted waters.

    ATI is poised to launch at Computex next month what could be the
    first integrated chip set to run Microsoft's DirectX 8.1 API, use dual-
    channel 400-MHz double-data-rate memory and link to the 800-MHz bus
    for Intel's next-generation Pentium, dubbed Prescott. The chips could
    leapfrog anything chip set makers Intel, Silicon Integrated Systems
    and Via can offer in graphics while also beating Nvidia, which makes
    chip sets for AMD CPUs but has no Intel processor bus license.

    The launch is especially sweet for ATI, which lost its perch atop PC
    graphics after Intel Corp. rolled out a new category of chip sets with
    integrated graphics in late 1999. Afterward, the erstwhile market
    leader saw its share of desktop sockets nearly halved.

    But before it faded into graphics history, ATI beat out offers from
    competitors S3 Corp. and Nvidia to acquire ArtX (Palo Alto, Calif.),
    seen by many as the last hot startup in the maturing PC graphics
    industry. ATI bought ArtX in February 2000 for about $400 million in
    stock and options.

    Since that time, the 70-person startup has been reinvigorating ATI
    with efforts that are now starting to bear fruit on several fronts.
    "The center of gravity for ATI has definitely shifted from Canada to
    California," said one observer who asked not to be named.

    The story begins in late 1997, when a handful of top engineers and
    managers from Silicon Graphics Inc., many of whom had helped design
    the Nintendo 64 console, got an idea for a startup. They would cram
    high-end graphics into a PC chip set and leapfrog the giants of the
    mainstream desktop world by leveraging what they learned from
    designing a high-performance, low-cost game box.

    The result was ArtX, which got initial funding from Taiwanese PC
    maker Acer Inc. About nine months later, old contacts from Japan came
    seeking a partner for their next-generation console, which later
    became the Nintendo GameCube.

    "They had given up on SGI. The last of the people they trusted were
    gone, and they went looking for the people. It's not a company-to-
    company thing for them; it's a person-to-person thing," said Greg
    Buchner, at that time the head of ArtX.

    The visit sparked a debate at the small startup. "We said we really
    didn't want to divert ourselves, but Nintendo can make a pretty
    compelling argument and it was a pretty huge opportunity, so we
    decided to go ahead in mid-'98," said Tim Van Hook, chief designer for
    the Nintendo 64 and a founder of ArtX. So ArtX forged a deal to
    develop the Flipper chip for the console code-named Dolphin in return
    for royalties. "We knew we couldn't take on the [chip] manufacturing.
    That would require as many more people as we had in the whole company
    at that time," said Joe Macri, another SGI veteran who became the 23rd
    person to join ArtX. He is now a director of technology at ATI.

    At Comdex/Fall in 1999, the startup launched with some fanfare its
    ArtX1 PC chip set. By that time, the company had hired as its
    president David Orton, a hard-charging former manager of SGI's
    advanced-graphics division, who was keen to take ArtX public. However,
    an IPO looked risky. As it turned out, the Comdex splash brought the
    company lots of attention-and acquisition offers from ATI, Nvidia and

    It wasn't hard sorting out those bids. S3 was already in trouble and
    would break up in April 2000. "We could see the initial signs of
    that," said Buchner. As for Nvidia, "we didn't think it would work
    culturally or from a valuation perspective."

    ATI was the clear fit. It was trying to get its own integrated-
    graphics program off the ground to catch up with Intel, which was
    wreaking havoc with the market. ATI had an Intel bus license, but it
    had no presence in the console space, no office in Silicon Valley and
    was badly in need of a makeover. Indeed, ArtX and ATI managers
    separately described ATI at the time of the acquisition as "a sea" or
    "a blob" of engineers without clear lines of responsibility. "They
    were a startup with one big organization," said Buchner.

    In what turned out to be a case of the tail wagging the dog, ArtX's
    Orton was named president and chief operating officer of the merged
    entity from the outset. He reorganized ATI into separate business
    units and three major design teams under a handpicked set of managers
    who shared his drive to compete.

    "He is someone who loves a good fight and he loves to win it," said
    Buchner, now one of two chief technology officers and four vice
    presidents of engineering at ATI.

    Leveraging the ArtX team in Palo Alto, Orton created a Silicon Valley
    base for ATI just a mile down the road from Nvidia's sprawling green-
    marble headquarters in Santa Clara. Engineers at the ATI site finished
    the GameCube graphics chip, then led the design for the R300 graphics
    core, ATI's first to execute Microsoft's DirectX 9 application
    programming interface.

    The DirectX spec was driving a new architectural direction in PC
    graphics. Rather than delivering fixed functions based on
    approximations using integer math and a graphics pipeline pioneered by
    SGI, DirectX 8.1 had taken a new course: toward more general-purpose
    programmable vector processors based on more-exacting floating-point

    Ultimately, it is thought that the DirectX evolution will lead chip
    makers to create devices based on dozens of computing elements that
    can calculate polygon vertices and run pixel-shading programs for a
    variety of graphics and video applications. Sony, IBM and Toshiba
    apparently share this vision. Their Cell architecture-announced in
    March 2001, though not yet released-could someday use hundreds of
    cores in a parallel array to power future Playstation consoles and a
    wide variety of other broadband multimedia products.

    "It's all about programmability now. That's the new battleground,"
    said Peter Glaskowsky, editor of the Microprocessor Report. "These
    chips are not distinguished by the number of parallel pipelines or
    clock rates anymore. The key issue is how much can you do to each
    pixel you draw, how many programmable instructions you can run per

    In this environment, ATI tacked into the wind. Unlike past cores that
    aimed for good-enough graphics, the R300 represented an effort to
    match or beat the best desktop chip Nvidia might offer. "We didn't say
    get the best performance at 10 x 10-mm die size. We just said get the
    best performance. We had to go out and capture the flag," said Orton.

    And last August, ATI did just that, launching its Radeon 9700 six
    months before Nvidia shipped its GeForce FX part for DirectX 9. That
    lead-a rarity in PC graphics, where new cores ship every 12 to 16
    months-was as much a triumph of execution for the reorganized ATI as
    the result of stumbles at Nvidia.

    According to Macri, the tale of the tape fell on two strategic
    decisions. Nvidia opted for a 128-bit memory bus linked to next-
    generation GDDR-2 memory and made in the latest 130-nanometer copper
    process. ATI chose a 256-bit-wide memory bus geared for fast transfers
    over existing GDDR memory and made in a 150-nm technology-effectively
    the last generation of aluminum interconnects.

    "You can blame me for the 150-nm decision," said Buchner, who leads
    on silicon issues in his CTO role. "It was one of the biggest unending
    arguments in the company. It was not a question of 130 nm not being
    ready. It was more about trying to hit the ground running and asking
    how many risks we want to take."

    For its part, Nvidia attributed its delays on the GeForce FX to
    "getting the chips to yield at speed," said Dan Vivoli, vice president
    of marketing. Nvidia recently signed IBM as a fab partner in addition
    to its existing one, Taiwan Semiconductor Manufacturing Co. Some think
    that move could give it an edge getting to 90-nm chips.

    While the high-end graphics chips get much of the attention, chip
    sets with integrated graphics have swept across the market, becoming
    in some ways more strategic. Market watcher Mercury Research
    (Scottsdale, Ariz.) estimates that by the start of 2003, as much as
    half of all desktops used integrated graphics, a category that didn't
    exist before 1999. In this sector, ATI's progress has come more

    ATI combined its internal teams with those from ArtX and another
    acquisition, Chromatic Research. After misfiring on a couple of
    generations, ATI aimed at its core notebook users and hit the jackpot
    with the U1, which shipped last summer. ATI's integrated chips now
    sell at about a million units per quarter, a notch above Nvidia's
    integrated parts, said Dean McCarron, principal at Mercury Research.
    The company will pitch the integrated chip set that is to debut in May
    for low-cost, high-performance consumer systems. That positioning
    might be a sop to soften competition with technology partner Intel,
    which could continue to command the chip set space for business
    desktops that don't require heavy graphics.

    Also next month, Microsoft Corp. will make a move that will likewise
    strengthen ATI's hand in chip sets. At the Windows Hardware
    Engineering Conference, Microsoft will detail plans to use a 3-D
    interface on its next version of Windows, dubbed Longhorn and slated
    for 2005. Such a move could bolster ATI as one of the few chip makers
    capable of easily rolling out a DX 9 chip set in time for Longhorn's
    release. A higher profile for 3-D could ultimately boost the fortunes
    of all the graphics companies and set the stage for the PC, not the
    console, to command the most attention among software developers.

    "When the OS has 3-D as part of the environment, that's the point
    when 3-D moves into everybody's world," said Dave Rolston, who heads
    ATI's 175-person Silicon Valley office.

    In this expanding environment, the ATI vs. Nvidia battle has lots of
    legs. Nvidia will launch within days its next-generation core, the
    NV-35, which is expected to sport a 256-bit memory bus and other major
    enhancements. "It will be unambiguously the best," said Vivoli.

    Meanwhile, both companies have hit the market with versions of their
    latest DX 9 parts aimed for mainstream desktops, where most of the
    money in PC graphics lies. "The design wins are happening right now,"
    said analyst McCarron.

    Beyond that the two are set to slug it out all over again with their
    next-generation cores built for the new PCI Express interconnect. ATI
    is also challenging Nvidia for the graphics socket in the next-
    generation Microsoft Xbox and is charging into consumer applications
    such as cell phones and set-top boxes. "In 2004 ATI will become a
    visual-computing company beyond the PC. We've got to get into a faster-
    growing part of the market," Orton said.

    parallax-scroll, Sep 14, 2012
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  2. parallax-scroll

    Tom Lake Guest

    I didn't realize April 1 had arrived early!
    Tom Lake, Sep 15, 2012
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  3. parallax-scroll

    Mike S. Guest

    ATI? Weren't they known for a product called the VGA Blunder?
    Mike S., Sep 19, 2012
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