Critical.
Authoritative.
Strategic.
Subscribe to CIO Magazine »

Smartphone maker HTC to buy chip firm S3 Graphics for $300M

With the acquisition, HTC will gain 235 patents, including some subject to ongoing litigation against smartphone rival Apple

Smartphone vendor High Tech Computer (HTC) will acquire graphics chip maker S3 Graphics for US$300 million, strengthening its patent portfolio in the process.

With the acquisition, HTC will obtain S3 Graphics' portfolio of 235 patents and pending applications, including a number covering graphics visualization technologies.

"S3 Graphics' patents are highly complementary to HTC's existing innovations and multimedia capabilities," said HTC CEO Peter Chou.

Some of those patents are already the subject of litigation against other smartphone vendors, and the deal should help HTC protect itself from patent litigation in the future, according to analysts.

"In the smartphone and tablet business, there are a lot of patent lawsuits," said BNP Paribas analyst Laura Chen. "S3 has a lot of patents, and HTC needs more bargaining power in the smartphone business."

On July 1, a U.S. International Trade Commission judge ruled that Apple infringed on some of the claims contained in two S3 Graphics patents. Judge E. James Gildea found that Apple infringed on U.S. Patent No. 6,658,146 directed to systems and methods for compressing images and U.S. Patent No. 6,683,978 directed to image data formats, both of which belong to S3 Graphics.

Apple and HTC are no strangers in intellectual property litigation. In March last year, Apple sued filed a lawsuit against HTC for infringing on 20 Apple patents related to the iPhone's user interface, underlying architecture and hardware.

HTC is buying S3 Graphics from Via Technologies, a Taiwanese chip design company that sells x86 processors in competition with Intel, and from private investment firm WTI Investment International. HTC chairperson Cher Wang is also chairperson of Via Technologies and a significant shareholder in WTI.

Ownership of S3 Graphics' patents will change, but "HTC will provide a perpetual license of the S3 patents to Via," HTC CFO Winston Yung said.

The transaction will allow Via to retain its graphics capabilities to support the development and sale of its processors and chipsets, said Via Senior Vice President Tzu-mu Lin.

The deal has received approvals from the boards of directors of HTC and Via. Subject to regulatory approvals and other customary conditions, they expect the transaction to close by year end.

HTC announced its second quarter results on Wednesday, with revenue of NT$124,398 million, more than double that in the same period a year ago.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

More about: Apple, High Tech Computer, HTC, Intel, International Trade Commission, S3 Graphics, Via Technologies, Wang
References show all

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
Users posting comments agree to the CIO comments policy.
Login or register to link comments to your user profile, or you may also post a comment without being logged in.
Related Coverage
Related Whitepapers
Latest Stories
Community Comments
Tags: High Tech Computer, Via Technologies, S3 Graphics, consumer electronics, smartphones, Components, Graphics boards, legal, intellectual property, patent
Latest Blog Posts
Whitepapers
  • Data Center Physical Infrastructure: Optimising Business Value
    To stay competitive in today’s rapidly changing business world, companies must update the way they view the value of their investment in data center physical infrastructure (DCPI). No longer are simply availability and upfront cost sufficient to make adequate business decisions. Agility, or business flexibility, and low total cost of ownership have become equally important to companies that will succeed in a changing global marketplace.
    Learn more »
  • New Mobility Requires a New Network Strategy
    Computing has gone through several major transitions through the ages, each of which raised the value of the network and dramatically lowered the cost of computing. In the years after its birth in the mainframe era, the computing industry shifted to client/server and then Internet computing. Today, we are beginning yet another major computing revolution: the shift to mobile computing. This revolution already allows us to carry mini computers, called “smartphones,” in our pockets. This shift will drive down the cost of computing even further and drive up the value of the network, forever changing its role in organisations. Read on.
    Learn more »
  • Managing Trust - Data protection and compliance for financial services
    If it’s becoming something of a cliché that the financial services industry is one of the world’s most heavily regulated, that’s largely because it’s true. Data retention and archiving, authentication and authorisation, data loss prevention and privacy regulations compete with demands for transparency and accountability, while market imperatives calling for multiple service channels delivered over a broad spread of technologies add to the pressure. Read on.
    Learn more »
All whitepapers
rhs_login_lockGet exclusive access to Invitation only events CIO, reports & analysis.
Recent comments