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ATI Fourth Quarter Financial Update

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MARKHAM, Ontario, Aug 29, 2005 (BUSINESS WIRE) -- ATI Technologies Inc. (NASDAQ:ATYT)(TSX:ATY) today provided an update on expectations for its fourth quarter of fiscal 2005. ATI now expects revenues for the fourth quarter to be in the range of $465 - $480 million(1), compared to the expected range of $550 - $580 million provided on June 23, 2005. Gross margin percentage for the quarter is expected to be in the single digit range, which includes an inventory writedown that is expected to be approximately $60 - $70 million. Operating expenses, excluding the costs associated with stock-based compensation, are expected to be in the range of $143 - $148 million, which is in line with guidance.

ATI's desktop product line missed both in units and average selling prices for the retail and add-in-board (or System Integrator) channels. All other product lines are expected to be in line with company expectations for both revenue and gross margin.

"This has clearly been a challenging and disappointing quarter for ATI and we are committed to resolving our operational issues," said David Orton, President and Chief Executive Officer of ATI Technologies. "Despite our short term difficulties, we are optimistic about the future. We continue to gain traction in our integrated and consumer businesses. We are also confident that our upcoming desktop product launch will allow us to reclaim top-to-bottom technology leadership in discrete graphics."

The company will hold a conference call today at 5:00 pm EDT to discuss the fourth quarter financial update. ATI will report its fiscal 2005 fourth quarter financial and operating results on October 6, 2005. The company will provide additional information, including a more detailed quarterly review and outlook, during its regularly scheduled conference call on that date.

Conference Call Information

ATI Technologies Inc. will host a conference call today at 5:00 pm (EDT). To participate in the conference call, please dial 416-340-2216 ten minutes before the scheduled start of the call. No password is required. Replays of the conference call will be available through September 5, 2005 by calling 416-695-5800. The passcode is 3161717.

Important Information Regarding Forward-looking Statements

Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "plans," "intends," "anticipates," "should," "estimates," "expects," "believes," "indicates," "targeting," "suggests" and similar expressions.

This news release contains forward-looking statements about ATI's objectives, strategies, financial condition and results. These "forward-looking" statements are based on current expectations and entail various risks and uncertainties. Our actual results may materially differ from our expectations if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Therefore we cannot provide any assurance that forward-looking statements will materialize. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. Additional information concerning risks and uncertainties affecting our business and other factors that could cause our financial results to fluctuate is contained in our filings with Canadian and U.S. securities regulatory authorities, including our 2004 Annual Information Form and 2004 Annual Report filed on SEDAR at