Semiconductor company Via has announced the sale of S3 Graphics to smartphone giant HTC for a total of $300 million, with investment company WTI getting half that cash.
"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, SVP of VIA. "We wish to thank WTI for its capital contribution to support S3 Graphics since 2005."
Via acquired S3 back in 2001 to boost the graphics capabilities of its chipsets, but S3 has been pretty quiet for some time, mostly restricting its activity to defending its patents. The main reason for acquiring the company would be its graphics IP, but it remains to be seen what HTC is going to do with it.
There seem to be two main options, which are not mutually exclusive. The immediate gain is in patents. We've seen recently how valuable tech patents have become as the Great Mobile Internet Landgrab gets increasingly litigious. Any opportunity to boost its patent portfolio will be seriously considered by any serious player in the mobile device market.
S3 has two patents in particular that seem to be a rich source of licensing revenue, which cover ‘texture compression' (S3TC). Licensees include Microsoft - for DirectX and Windows 7 - and Nintendo. But an intriguing new development emerged a few days ago: Apple was found to have infringed S3TC technology by the ITC. So HTC seems to have bought some leverage over Apple that, at the very least, may come in handy in the ongoing legal aggro between the two.
The other possibility is that HTC may be thinking about designing its own SoC. Its two biggest rivals - Apple and Samsung - already do, so why not? While we're not saying this is impossible, HTC doesn't have anything like the size and resources of the other two, so we question how likely such a move it. Then again, ARM and Imagination Technologies are both continually striving to lower the barriers to entry to licensing their IP so you never know.
Incidentally, Reuters is reporting that HTC's Q2 profit figure is double that of a year ago, and ahead of market expectations. HTC hasn't formally published its Q2 figures yet, but it apparently revealed this figure in a statement.