Advanced Micro Devices, the No. 2 supplier of computer processors, is close to a deal to buy graphics chip maker ATI for $5.5 billion and unless talks break down, a deal could be announced as early as Monday, a source familiar with the situation said on Friday.
Any such deal would shake up the processor industry, which is witnessing a battle over market share between AMD and larger rival Intel.
Shares of ATI rallied on Friday on renewed speculation that a deal was close at hand. Rumors that AMD could purchase the Canadian graphics chip maker surfaced in late May when an analyst suggested the move could make AMD more competitive with Intel. The speculation sent ATI shares surging about 10 percent.
AMD shares closed at $18.26, down $3.39, or 15.7 percent, on the New York Stock Exchange as investors worried that the company would not be able to continue grabbing market share from Intel.