Graphics card specialist ATI is believed to be in talks to buy media processor developer Chromatic.
Both companies have admitted they are talking together but neither will say what the goal of the negotiations is.
For Chromatic, a deal with ATI couldn't come at a better time. Its most recent offering, the Mpact 2, which combines 2D and 3D acceleration with video support on a single chip, failed to find widespread support. Chromatic has now ceased development work on it.
Media processors have largely been superseded by dedicated 3D systems such as 3Dfx's Voodoo range and Nvidia's Riva line of accelerators. Consumers see clearer benefits in 3D acceleration than in video digitisation, the application at which media processors are generally aimed.
However, Chromatic is working on a totally new architecture, possibly designed to bring 2D and 3D acceleration to set top boxes, a market of which ATI - despite its knowledge of graphics technology - has little expertise.
Reason enough to consider a takeover? Perhaps, but Micro Design Resources senior analyst Peter Glaskowsky, was more cautious. "There's simply not enough data out there to see if it makes sense yet," he said.
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