Smartphone Maker HTC Buys S3 Graphics From VIA, WTI For $300 Million

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VIA Technologies, a Taiwan-based developer of x86 processor platforms, this morning announced that it has sold all of its shares in S3 Graphics, a provider of graphics visualization technologies used in PCs, game consoles and mobile devices based in California.

The buyer is smartphone manufacturer HTC, which is acquiring all outstanding shares of S3 Graphics for a grand total of $300 million.

Once it obtains full ownership of S3 Graphics, HTC will not only gain the company’s experienced team but also quite some valuable intellectual property and a ton of know-how on building energy-efficient graphics and video solutions.

VIA Technologies acquired S3 Graphics in 2001 with the intention to accelerate integration of graphics capabilities with its processor and chipset products. S3 Graphics became undercapitalized in 2005, prompting VIA to add WTI Investment International as a new investor to help fund the operations and R&D initiatives.

Notably, WTI is a private investment company, in which VIA Technologies chairman Cher Wang is a significant shareholder. Update: Wang also co-founded HTC, by the way.

VIA will receive $147 million, while WTI will receive $153 million. VIA will recognize a capital gain of $37 million and paid-in-capital of $115 million in this transaction.

“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.

The transaction is subject to regulatory approvals and other customary conditions but is expected to close before end of 2011.

S3 Graphics recently made headlines with its patent infringement suit against Apple. The company filed an ITC complaint in May 2010, and an eight-day trial was held in March 2011.

Earlier this month, ITC Judge E. James Gildea ruled that Apple infringes US Patent 6,658,146 directed to systems and methods for compressing images and US Patent 6,683,978 directed to image data formats, both of which belong to S3 Graphics (and soon, to HTC).

Apple was found not to violate two other patents.