According to reports in yesterday's Wall Street Journal, AMD plans to buy graphics chip vendor ATI for $5.4bn (about £2.9bn).

AMD plans to host a conference call for a "significant corporate announcement" today at 1pm BST.

The acquisition will turn AMD into one of the world's largest providers of graphics chips. ATI reported net income of $31.9m (£17.2m) on revenue of $652.3m (£352.9m) during its fiscal third quarter, which ended on 31 May. At that time, the company said revenue for the current quarter would be between $620m and $690m.

Rumours that AMD will buy ATI have been circulating for a couple of months. The deal will add significantly to AMD's product line, bringing in a range of cutting-edge graphics chips and chipsets that include integrated graphics capabilities. Chipsets are the component on a PC motherboard that link a processor with main memory and other components, such as a hard disk.

These additions to AMD's product line will help the company to match rival Intel – which offers its own line of chip sets with graphics capabilities – more effectively. But the deal is likely to threaten AMD's relationship with nVidia, ATI's main rival in the graphics space and an important AMD partner.