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Print 25 comment(s) - last by Taft12.. on Jul 7 at 11:51 AM

Apple might be in HTC's cross hairs

The GPU will become increasingly important as mobile phone firms seek to squeeze more and more performance out of smartphones for gaming and streaming of video. VIA has announced today that it has sold its stake in S3 Graphics to HTC. HTC is well known in the Android smartphone and tablet realm.

VIA, WTI, and HTC have signed an agreement that will see all shares in S3 go to HTC. VIA acquired S3 in 2001. The terms of the agreement show HTC will pay $300 million for all of the outstanding shares of S3 Graphics. VIA will receive $147 million of that amount and VIA's current partner WTI Investment International will receive $153 million.

The capital gain for VIA will be $37 million with $115 million paid-in capital for the transaction. The proposed transaction has been approved by the boards of VIA, WTI, and HTC. WTI became a partner with VIA in S3 in 2005 when S3 Graphics became undercapitalized.

We can assume that HTC wants the mobile graphics company to improve on the graphics processing in its smartphones and to be able to design and build its own graphics processors for its products.

“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.”

Perhaps more interesting about the deal is the fact that Apple was recently found to infringe on two patents held by S3 Graphics. This will put HTC in the position to possible force a large settlement out of Apple or a patent agreement. Apple's iPhone is the largest competitor to Android smartphones that HTC produces.


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Interesting
By Motoman on 7/6/2011 1:44:13 PM , Rating: 4
The thing that I find most interesting is HTC wanting to take on a video hardware engineering interest like S3. That's a considerable expansion of what they do today...which is primarily making designs around products made by others. To take control of the primary design and manufacturing of the video chip itself is a whole other ball of wax.

Having said that, I wish them luck with it. Gawd knows S3 didn't do Via much good.

something something something Bitboys.




RE: Interesting
By aegisofrime on 7/6/2011 1:51:25 PM , Rating: 2
It's all part of securing your supply chain. Probably the same reason Apple bought some chip design company (can't remember the name ATM), and OCZ bought Marvell.


RE: Interesting
By chiadog on 7/6/2011 1:56:43 PM , Rating: 2
Yep, typical vertical integration.


RE: Interesting
By Ushio01 on 7/6/2011 1:58:20 PM , Rating: 5
OCZ bought Indilinx not Marvel


RE: Interesting
By nafhan on 7/6/2011 2:36:35 PM , Rating: 3
I just don't see HTC getting into chip design. It seems more likely that HTC has a bunch of cash and wants to secure some patents to protect themselves from Apple (this is alluded to in the article). I think if HTC actually does something with the IP, they'll be licensing it out to the chip designers rather than doing creating something themselves.


RE: Interesting
By DanNeely on 7/6/2011 2:54:26 PM , Rating: 2
I'd think it more likely that HTC would keep the S3 unit operating independently. They're getting a full team of GPU designers with their purchase; it'd be stupid not to keep using them as such.


RE: Interesting
By nafhan on 7/6/2011 3:29:46 PM , Rating: 2
It'd also be stupid to keep a whole team to design GPU's that aren't making any money. Maybe they'll fire the hardware guys and have the software engineers start making drivers for HTC phones...?


RE: Interesting
By DanNeely on 7/6/2011 3:55:54 PM , Rating: 2
Where do you get that s3 has been losing money for Via? While they haven't been a mainstream brand for years their GPUs have been going into all of Via/Centaur's embedded boards. IIRC they're also on a fair number of Intel server mobos for classes where neither the CPU nor the chipset has an IGP (LGA1366, LGA1567) and all that's needed is enough GPU to run a basic windows desktop for RDP/diagnostic purposes.


RE: Interesting
By nafhan on 7/6/2011 5:26:09 PM , Rating: 1
To be clear: everything I've said is conjecture and assumption, I'm not privy to the inner financial details of Via's S3 division.

That said, nothing you've mentioned sounds like the type of business that would support development of first (or even second) class graphics chips. They may continue development and they're certainly going to license (at least to Via), but I still think HTC made this purchase primarily to get S3's IP.


RE: Interesting
By Taft12 on 7/7/2011 11:49:39 AM , Rating: 2
quote:
To be clear: everything I've said is conjecture and assumption, I'm not privy to the inner financial details of Via's S3 division.


I've never seen such serious backpedalling (and rightly so since your original post stated things as fact you had no clue about)


RE: Interesting
By DanNeely on 7/6/2011 3:59:04 PM , Rating: 3
Also the PR from VIA strongly implies that they intend to keep using s3 GPUs for their embedded boards. This wouldn't make sense if HTC wasn't intending to keep S3 running at least in the medium term.

“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.


RE: Interesting
By FITCamaro on 7/6/11, Rating: -1
RE: Interesting
By threepac3 on 7/6/2011 2:59:54 PM , Rating: 2
Verizon's bloatware is much worst then HTC's.


RE: Interesting
By Ushio01 on 7/6/2011 2:02:50 PM , Rating: 4
Cher Wang is the chairperson and co-founder of HTC and wife of Via founder and CEO Wen Chi Chen so there still keepin it in the family.


RE: Interesting
By Omega215D on 7/6/2011 2:03:34 PM , Rating: 2
Probably interested in the patents they hold. Seems like a decent move for any future endeavors.


RE: Interesting
By XZerg on 7/6/2011 3:33:18 PM , Rating: 2
You might want to read this article instead - http://www.xbitlabs.com/news/mobile/display/201107...

quote:
However, S3 Graphics became undercapitalized in 2005, and Via introduced WTI Investment International as a new investor to help fund the operations and R&D initiatives. WTI is a private investment company, in which Cher Wang [chairman of Via as well as chairman and co-founder of HTC] is a significant shareholder.


Cross-company moving of assets or too much conflict of interest here or may be using her power in HTC (profiting company) to balance/recover her $$$ that may be lost in this whole S3-Via fiasco?


RE: Interesting
By Motoman on 7/6/2011 11:29:24 PM , Rating: 1
Interesting indeed.


RE: Interesting
By carage on 7/7/2011 8:47:46 AM , Rating: 2
That is certainly one possibility that many Taiwanese investors believe.
Another conspiracy theory is that Apple violated certain S3 patents. So by moving the patents to HTC, HTC now has something they can threaten Apple with.


Blast from the past
By MrTeal on 7/6/2011 1:42:23 PM , Rating: 2
I wasn't even aware that S3 is around any more. I wonder if they still produce anything, or if their entire value is based on their patent portfolio?

I probably still have a few PCI Virges in parts boxes somewhere in the basement.




RE: Blast from the past
By Motoman on 7/6/2011 1:44:54 PM , Rating: 1
The stuff was being bundled into Via chipsets - the Chrome graphics stuff was S3 tech.


RE: Blast from the past
By The0ne on 7/6/2011 1:47:28 PM , Rating: 2
They're still around. I still see designs here and there that uses chips from the company...for embedded designs.


RE: Blast from the past
By MrTeal on 7/6/2011 2:26:23 PM , Rating: 2
Well crap, I need to clean out the basement.

http://cgi.ebay.ca/Biostar-S3-Virge-PCI-slot-video...

I probably have a few hundred dollars in old video cards, sound cards, RAM and NICs at the price those sell on eBay for.


RE: Blast from the past
By Gondor on 7/7/2011 6:34:05 AM , Rating: 2
Is that an overly optimistic price or what ? ($15.99 in case the auction expires)


RE: Blast from the past
By Taft12 on 7/7/2011 11:51:41 AM , Rating: 2
PCI video cards are very useful for many-monitor applications. I'd buy it for $16!


fsda
By rangtangnan on 7/6/11, Rating: 0
"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer











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