AMD to Start Shipping "Fusion" Chips

Advanced Micro Devices Inc. said it has begun shipping its first chips that combine microprocessor and graphics circuitry on the same piece of silicon, fulfilling the promise of a costly 2006 acquisition that reshaped the company.

The company also told analysts Tuesday it should be able to reach gross profit margins of 44% to 48% in 2011–up from a prior target of 40% to 45%–and said a long-term goal of 50% should be achievable.

AMD’s technology milestone, part of a strategy called Fusion, opens a new chapter in AMD’s longtime competition with Intel Corp. Where AMD has often lagged its much larger rival in microprocessors, it believes the technology acquired through the $5.4 billion purchase of ATI Technologies provided a lead in an emerging breed of products that AMD calls APUs, for accelerated processing units.

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