ATI Loses Dell Optiplex Deal: Says Outlook is Still Strong.

ATI Technologies Inc has lost its deal with Dell Computer Corp to supply its Rage 128 Pro graphics chips for Dell Optiplex high-end networked PC systems in the fall. The deal was worth $10m per quarter in component sales. Trading of the company's shares was halted on the Toronto stock exchange Tuesday morning.

The deal appears to have been lost to Nvidia Corp, which announced OEM deals from Dell, along with Gateway Inc, Compaq Computer Corp, Micron Electronics, Inc and NEC Direct for its new GeForce 256 "graphics processing unit" (see separate story). To meet the demand, Nvidia says it has now begun a full production ramp of the chip. Nvidia didn't specify which Dell systems the GeForce would be used in, but industry sources at the Intel Developer's Forum confirmed that the Nvidia chip would be a replacement for ATI's Rage. The same sources said ATY was late with its next cycle of products, and should have had a new desktop part out by now.

ATI said Dell "remains a major customer", particularly in the notebook market, where the company claimed its 3D technology is now "poised to become the leader next year." ATI, which saw total sales of $927m for the nine months ending May 31 1999, said its fourth quarter sales are still on target and the outlook for fiscal first quarter "solid." It said it continued to anticipate overall market share growth.