newsvia to sell s3 graphics to htc

Via to sell S3 Graphics to HTC

In the PC market these days, the integration of microprocessors and graphics is the name of the game—it drove AMD to purchase ATI back in 2006, and it’s pushing Intel to offer ever-faster integrated GPUs inside its CPUs. What about Via? Well, the small Taiwanese firm announced a rather surprising move earlier today: it’s selling its entire stake in S3 Graphics to handset maker HTC.

S3 Graphics, of course, can claim credit for serving up Via’s various integrated graphics processors over recent years. Via snatched up S3 back in 2001, but it sold part of its stake to private investment firm WTI Investment International in 2005 to “help fund the operations and R&D initiatives.” Now, HTC will purchase “all outstanding shares” of S3 Graphics, paying Via $147 million and WTI $153 million.

Interestingly, it looks like Via will get to keep using S3’s graphics technology after the buyout’s expected completion date (some time before the end of 2011), presumably through some sort of licensing agreement:

“The transaction would allow VIA to monetize a portion of its rich IP portfolio, yet retain its graphics capabilities to support the development and sale of its processors and chipsets,” said Tzu-mu Lin, Senior Vice President and Board Director of VIA. “We wish to thank WTI for its capital contribution to support S3 Graphics since 2005.”

That leaves us scratching our heads about the reasons for the move. I suppose Via might be in need of the cash—though, from talking with the company, I’ve gotten the impression that it’s doing reasonably well in developing markets like China. Selling off one of its key assets certainly seems like an odd way to stay afloat.

Looking at the people involved may provide some clues. As the press release points out, Cher Wang is Via’s Chairperson and a “significant shareholder” of WTI, which co-owns S3. Mrs. Wang also happens to be one of the co-founders of HTC… and Wikipedia tells us she’s married to Via founder and CEO Wen Chi Chen. Perhaps the move isn’t as drastic as it might seem to the uneducated eye, then.

We could also don our tinfoil hats and surmise that Via is merely setting the stage for another acquisition—one involving Nvidia. Yes, Nvidia has repeated time and again that its microprocessor strategy is focused on ARM, and it’s even announced an ARM-based processor for desktops and servers. That said, the rumor mill has been churning away for some time about the possibility of an Nvidia-Via merger, which would finally endow Nvidia with an x86 CPU license—and the ability to compete with AMD and Intel on their home turf.

Cyril Kowaliski

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