Former AMD employees claim the company had its eyes set on Nvidia first before purchasing ATI.
Former AMD employees told Forbes that the company approached Nvidia about a possible acquisition long before it pulled out the wallet to purchase ATI for $5.4 billion back in 2006.
At the time, AMD was out to get ahead of rival Intel by grabbing a piece of the GPU market and fusing the technology with its own CPU offering. Thus AMD would be in a position to provide a CPU/GPU solution that Intel really wasn't ready to offer.
But during the talks, Nvidia Chief Executive Jen-Hsun Huang reportedly insisted that he become chief executive of the combined company. Naturally AMD Chief Executive Hector Ruiz wasn't going to let that happen, so he chose to acquire rival ATI instead.
After the acquisition, AMD struggled to integrate its newly acquired graphics business as Nvidia unleashed a flood of strong products, consuming large chunks of market share. AMD eventually gathered its forces and fought back, but Nvidia had already moved aggressively into the mobile SoC market by introducing its ARM-based Tegra chip.
With Tegra installed in tablets and smartphones, Nvidia now has a market capitalization of $9.7 billion whereas AMD is worth just $5.2 billion.
Forbes said Nvidia declined to comment.