HTC buys troubled graphics firm for patent power

The race to bolster patent portfolios continued apace in Taiwan this week as burgeoning device vendor HTC snapped up a graphics processor firm and long term partner.

HTC acquired S3 Graphics from Taiwanese chip maker Via Technologies for $300m and is probably glad to get rid of it. VIA acquired S3 in 2001 with the intention to accelerate integration of graphics capabilities with its processor and chipset products, but the new purchase became undercapitalised in 2005 and VIA introduced WTI Investment International as a new investor to bail S3 out.

Eyebrows are being raised over HTC’s move this week however, as Cher Wang is not only chairman of VIA, but is also a significant shareholder in WTI and co-founder of HTC.

Under the terms of the agreement, VIA will receive $147m and WTI will receive $153m of the purchase price, while VIA will recognise a capital gain of $37m for getting shot if S3.

In terms of IP, HTC will acquire 235 patents, mostly related to graphics technology, to bolster its portfolio. HTC is currently at legal loggerheads with Apple, as the big industry dust up over who’s copying who drags on.