In 2010, after 25 years, the ATI brand was phased out. Replaced by its owner AMD.
ATI was a survivor. They started off in Toronto. Far from Silicon Valley,
but somehow thrived and started making graphics accelerators.
They transitioned from 2D to 3D, competed head to head with market leader Nvidia,
struck a deal with Nintendo, and survived the graphics card wars.
What a journey! In this video, I want to take a look back at ATI.
## The Survivor
In 1983, a Hong Konger vacationed in the Canadian city of Toronto.
He and his wife fell in love with the place and decided to leave Hong
Kong behind to settle there. His name was Kwok Yuen Ho, or K.Y. Ho.
Ho's family had once been relatively well off.
But they lost everything they had during the Chinese Civil War, forcing them to
flee to Hong Kong. Ho sold vegetables while his father worked in a Hong Kong factory.
Nevertheless, Ho studied hard and in the 1970s he earned a scholarship to the prestigious National
Cheng Kung University in Tainan. In 1974 he graduated with a degree in electrical engineering.
After that, he returned to Hong Kong. There he worked in engineering, quality assurance,
manufacturing and so on at companies like Philips, Control Data Systems,
and National Semiconductor where my own father also worked.
## Canada
That was Hong Kong. But after immigrating to Canada,
Ho could not find a job like what he had back in the old country.
The Canadian electronics industry was far from Silicon Valley and was thus quite immature.
Like they often say in the inspirational videos, if you cannot find a job, then make your own.
At the time, most computer monitors were monochrome - meaning that everything on the screen
was displayed in varying tones of a single color. But color monitors were starting to catch on.
Ho believed that color monitors would make the PC a more mainstream product.
Such PCs would have to have more powerful graphics hardware to power those color monitors.
He wanted to supply those PC makers with the right graphics hardware for that.
So in 1985 Ho joined up with two other Canadian immigrants from Hong
Kong - Benny Lau and Lee Lau - to found a new company: Array Technologies Industry.
That name was soon abbreviated to just ATI.
## ATI Technologies
ATI started off with just a dream, six employees and its founders' life savings - about $300,000
Canadian dollars. They labored to make a product that they could sell to a bigger company.
It was tough going. Toronto, Canada is not exactly known for being a cutting-edge computing locale,
so PC makers weren't exactly beating a pathway to their door.
The founders' money ran out after three months, but the Singaporean bank UOB
stepped in with another loan of $300,000 - later increased to $1.5 million - to keep the lights on.
## Big Break
ATI started off as an Original Equipment Manufacturer designing
and producing graphic controllers. After that,
they started producing integrated graphics cards for PC makers like IBM and Commodore.
Their big break came when the PC maker Commodore started purchasing
their graphic controller chips. Very quickly ATI was selling over 7,000 chips a week,
finally putting the company on a stable footing.
ATI generated $10 million Canadian dollars in revenue their first year of operations
and a few years later, they would take their company public on the Toronto Stock Exchange.
## Graphics Cards
The company's first big product hits were the EGA and VGA Wonder series. The VGA Wonder in
particular, launched in 1988, was a breakthrough - offering graphics power far surpassing the rest
of the market while staying compatible with all the available market monitor options.
These two products drove ATI to 60 million Canadian dollars in sales,
and the company started calling itself the world's biggest graphics board-maker.
These early successes granted participation on some of the early graphics boards industry
standards. ATI was one of the nine founders of the Video Electronics Standards Association,
an international body that established the 800x600 resolution video display format.
Participation in these industry-wide standards
put ATI in an ideal position for the coming personal computing boom.
## PC Boom
The personal computers of the 1980s and early 90s were graphically simple.
There was no need for a dedicated graphics card. The CPU would handle all the complex
graphics operations and pass off the data to the display adaptor for image output.
But the rise of the Microsoft Windows operating system had started to strain this old paradigm,
overwhelming the display adapters.
I discussed some of these trends in my video on Nvidia's early development.
With graphics demands rising, ATI kicked off their Mach series of
chips - their second generation line of 2D graphics accelerators.
The Mach8 came out in 1991 - ATI's first product capable of processing graphical data without
a CPU - and was one of the market's first 2D graphics co-processors optimized for Windows.
The Mach32 came a year later in 1992,
putting the graphics controller and the graphics accelerator together on the same chip.
## The 3D Revolution
In 1996, the video game Quake hit the market - sparking the 3D graphics
revolution. The video graphics industry scrambled to release 3D capable cards.
A transition that not every company was capable of making.
To help with this transition, ATI acquired Kubota Graphics' design team in 1994.
This team had specialized in producing high-end computer graphics workstations.
Their contributions were instrumental in producing ATI's next hit product: the 3D Rage chip.
The 3D Rage originally had the more mundane name of 264GT, with the "G" standing for 3D
acceleration. But the product was renamed to 3D
RAGE to match up with S3's ViRGE 3D chip - which was being released at the same time.
3D Rage-powered boards were not as powerful as those made by other companies like Nvidia,
but ATI occupied and maintained a foothold in lower-priced
niches. Their chips provided good value for the money.
The company also moved to gain significant share in the notebook PC market.
The Rage Mobility chip, launched in 1998, defeated incumbents S3
and Neomagic - leaving ATI with strong positioning in the overall graphics market.
## Intel
With the fall of 3dfx in 1998, Nvidia comfortably occupied the gaming performance lead with ATI
coming up behind as the fast follower. And then a new challenger entered the arena - Intel.
In 1998, Intel attempted to take Nvidia head on with their Intel740
graphics card. After a much hyped launch, however,
the i740 failed to gain significant traction in the market due to performance shortcomings
... and perhaps a dose of Intel-like unfair business practices.
The i740's failure left the CPU giant to recalibrate their strategy.
They integrated graphics processors into their CPUs, producing graphics
capabilities that were just good enough to affect the low end graphics industry.
Being in the second place, value-oriented position,
ATI had the most to lose with Intel's encroachment into this
space. ATI management correctly predicted that graphics solutions would become widely common.
But they also correctly recognized that Intel's integrated graphics solutions
would eventually eat the market out from beneath them thanks to Intel's CPU monopoly.
Their corporate strategy in response was to broadly scale their capacities
across a variety of industries to cover everything from low-end gaming
to workstations to perhaps most famously, gaming consoles.
## Consoles
In 2000, ATI shelled out $453 million to acquire
an unknown 70-person startup called ArtX. ArtX designed graphics chips for the consumer market
and had been founded by members of Silicon Graphics' engineering team.
That team and its Taiwanese-American founder Wei Yen had worked on the Nintendo 64,
and stole away the Nintendo relationship.
They were contracted to work on the graphics processor for Nintendo's successor console - the
GameCube. ATI bought ArtX soon enough to put their logos on the chip and then later
produced graphics chips for the GameCube's successor the Wii and the Xbox 360 as well.
ArtX infused the company with a great deal of talent in new spaces.
ArtX's CEO joined ATI as its COO and set the company's sights towards expanding
into new industries as well as taking the performance crown from Nvidia.
To match Nvidia's ruthless product release cadence, ATI reorganized
their design organization into two separate teams.
The goal was for the two to develop and release products as fast as Nvidia could.
Soon thereafter, they were bringing out new products within a span of just
nine months. Which had consequences down the line.
## Back and Forth
Nvidia and ATI entered into a prolonged battle for market supremacy, regularly going back and forth.
In 2000, Nvidia released the GeForce 2 GTS chip, its followup to the GeForce
256 - the self-dubbed "first GPU". The 25 million transistor GeForce 2 chip
offered unprecedented performance gains over the rest of the industry.
At the time, ATI was preparing their response to the GeForce 256
and the successor to the aging Rage series of graphics chip - the Radeon.
Upon seeing the GeForce 2 specs, they went back and redesigned the
transform and lighting engine to run 20% faster.
And in a few preliminary benchmarks,
it seemed like the new Radeon chip outclassed its competitor.
Nvidia in response released a new driver, the Detonator3, which improved performance on the
GeForce family of cards - including the older GeForce 2 card - by a significant percentage.
## Drivers
That event illustrated another consistent ATI shortcoming.
Like Nvidia, ATI wrote their own drivers, but they were evidently not as good at it as Nvidia was.
Drivers are a critical part of the video gaming and developer experience. And shortcomings
in their drivers would cause ATI to squander genuine opportunities to take market leadership.
One notable such incident occurred in 2001 with the Radeon 8500.
The second generation of the Radeon series, the 8500 was built on the
same TSMC 150 nanometer process as its contemporary competitor the GeForce 3.
It also introduced an innovative feature called TruForm. TruForm was a tessellation engine.
Most 3D graphics surfaces are made up of triangles.
Tessellation automatically inserts additional triangles into the original image, improving
image quality to make them smoother and appear more natural without compromising on frame rates.
Offering this new, innovative feature along with comparable hardware gave the 8500 a
lot of potential. John Carmack of Doom fame had great things to say about the 8500's performance.
ATI really had a chance to leapfrog the competition here.
Unfortunately, rushed out, buggy early drivers
combined with a benchmark cheating scandal squandered the opportunity. Developers didn't
adopt the feature and TruForm was gradually pulled from the roadmap and the marketing.
## Acquisition
A few years later, the graphics card industry had largely narrowed down to ATI and Nvidia.
And despite ATI’s best efforts, over time Nvidia opened up a significant performance lead.
And financials weren’t looking good either. In 2005, ATI made
record revenues - $2.2 billion - on the back of new shipments for the Xbox 360.
Yet at the same time, the company made a meager $16.9 million in profit.
Their value-oriented cards sold well but yielded little to no profits.
At the same time, Intel loomed large in ATI's minds. 60-70% of ATI's chipset revenues
came from Intel platforms. And while the CPU giant had earlier failed to break into the discrete GPU
market, that did not preclude the company from making another attempt down the line.
So ATI sought to avoid getting caught in a pincer movement between Nvidia on the high end
and Intel on the low. They received a very rich $5.4 billion offer from AMD, which they took.
AMD had evidently attempted to acquire Nvidia first,
but turned to ATI after CEO Jensen Huang wanted to remain CEO of the combined enterprise.
## Post-Acquisition
At the time of the acquisition, people believed that GPUs and CPUs would eventually merge into one
processor. It kind of made sense with Intel's integrated graphics processors doing so well.
AMD acquired ATI not only because they wanted the many markets ATI had already expanded into,
but also to get the technical ability to build
their own CPU-GPU hybrids. AMD named theirs the Fusion APU.
However the two companies' employees struggled to work together,
with the two cultures dividing themselves into "green" or AMD
and "red" or ATI sides. This resulted in extended delays of the Fusion APU
product - over 2 years - and distracted them from dealing with other engineering issues at the time.
Furthermore, the ATI acquisition price was too high
and its non-GPU businesses were worth nowhere near what AMD paid for them.
In December 2007, AMD was forced to write down the value of their acquisition.
The ATI acquisition Resulted in AMD experiencing a financial loss in 2007
equal to over half of their revenue - $3.3 billion loss compared to $6 billion in revenue.
The company took further impairment losses in 2008
as ATI's positions in other industries like smartphones and televisions
deteriorated. In Q2 2008 alone, AMD took yet another billion dollars in charges.
Worse yet, AMD issued $2.5 billion of debt to raise the money for the purchase,
leaving the company with a staggering $5 billion of debt at the start of 2008.
And of course, 2008 would be the year of the Global Financial Crisis. PC sales cratered
amidst a global recession, leaving the company dangerously close to bankruptcy.
Only a massive financial infusion from Abu Dhabi averted the company from total disaster.
## Conclusion
Since those dark days, AMD has spun off their fabs into GlobalFoundries
and revitalized their positioning in CPUs thanks to savvy innovations like chiplets.
But in GPUs, Nvidia's offerings still lead the market in performance.
And the deep learning revolution has helped Nvidia unlock even greater revenue streams and profits.
AMD's Radeon GPUs haven't benefitted as such
due to CUDA's dominance. But the cards still continue to offer good value,
and being in second has pushed AMD to do new things like open sourcing their drivers.
The ATI name might no longer be around, and the company’s end as an independent entity nearly
sunk its acquirer. But at least the products seem to be still good. As always, a survivor.