BEIJING, July 25 -- Advanced Micro Devices Inc.(AMD) of the United States, the world's second-biggest semiconductor maker said on Monday it would?buy Canadian graphics chipmaker ATI Technologies Inc. for 5.4 billion U.S. dollars, adding computer-graphics chips to its product line-up.

Under terms of the pact, AMD will pay 4.2 billion dollars?in cash and 57 million shares of its own stock to acquire all of ATI's outstanding stock, the companies said on a conference call with analysts.

The acquisition would instantly turn AMD into a leading supplier of graphics chips, which render images for computer games and Internet video, and so-called chipsets, which connect a PC's processor to other system components.

ATI, which also supplies semiconductors used in mobile phones and high definition TVs, will also help AMD expand its reach into consumer products, executives said.

The deal, which is subject to approval by ATI shareholders and U.S. and Canadian regulators, is expected to be completed by year's end, AMD executives said.