CHIP DESIGNER VIA has closed a deal with smartphone vendor HTC to sell off its ailing S3 Graphics division.
S3 Graphics, which has been the eternal underdog in the 3D graphics arena, had all but ceased to exist in retail and outside of Asia. Its financial performance was lacking, to say the least, and even with a much-needed cash injection in 2005 from its investment partner, WTI Investment International, it failed to re-launch its graphics business.
VIA has announced that the deal will cost HTC a round $300 million (US), $147 million of which will line VIA Technologies' coffers while $153 million will go to WTI for its share of S3. In exchange, VIA will retain a permanent license to current S3 graphics intellectual property that will allow it to continue marketing its chipsets without having to shell out to HTC for licensing.
This is Taiwan, however, and there is usually a twist.
WTI Investment International is owned by Cher Wang, who coincidentally is also chair of the board at both VIA and HTC. So, regulatory approval aside, things are being kept in the family. Wang pays Wang for the IP owned by Wang through a different investment portfolio. Needless to say the transaction has already been approved by the boards of directors at all three companies.
An era has ended, we're afraid to say. The INQUIRER can still remember when Creative Labs snuck a handful of journalists to a private meeting just so it could show off the wonders of S3 Texture Compression. That was 11 years ago, when S3 was still rather competitive.
Actually S3 Graphics' single most valuable cash cow thus far has been S3 Texture Compression, which it has licensed to just about every graphics vendor. However, considering how the smartphone business is measuring itself against HTC, the company must be interested in taking the fast lane to designing an S3 Graphics core that will make it independent of other chip vendors' SoC designs.
Smartphone designers don't have many options available to them if they want to compete with the smartphone and tablet manufacturers that source chips from Nvidia (Tegra), Qualcomm (Snapdragon and Adreno), Imagination Technologies (PowerVR) or ARM (Mali).
It seems like a win-win situation for Wang and her investment portfolio. We're just surprised it didn't happen earlier. µ
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