HTC Corp (宏達電), the world’s fifth-largest smartphone brand, yesterday announced that it would spend US$300 million to acquire US-based S3 Graphics Co from VIA Technologies Inc (威盛電子), in an apparent move to bolster its technology capability as competition heats up in smartphone and tablet markets.
The company said in a statement that it would acquire all outstanding shares of S3 Graphics, adding that it expects to complete the deal by the end of the year.
The announcement of the purchase of S3 Graphics, a designer of graphics processor chips, came on the same day that the Taiwanese smartphone maker said its second-quarter net income more than doubled from a year earlier.
HTC’s net income amounted to a record NT$17.52 billion (US$607.3 million) in the April-to-June period, compared with NT$8.64 billion a year earlier and NT$14.83 billion in the first quarter.
The firm’s operating income also more than doubled to NT$19.24 billion in the quarter, the Taoyuan-based company said in a separate statement.
On Sunday, HTC posted second-quarter revenues of NT$124.4 billion, up 104.06 percent from a year earlier and 19.4 percent higher than the previous quarter, thanks to strong demand for its handsets that run on Google Inc’s Android operating system, such as the Sensation, Thunderbolt and Desire HD.
HTC said yesterday the purchase of all outstanding shares of S3 Graphics would greatly bolster its intellectual property portfolio, as the graphics IC designer’s portfolio includes 235 patents and pending applications, including several related to graphics visualization technologies.
S3 Graphics licenses its texture compression algorithms to industry heavyweights, such as Microsoft Corp, Sony Corp and Nintendo Co, for use in PCs and games consoles.
S3 Graphics’ algorithms have also been increasingly applied to smartphones and tablet PCs, as well as advanced 3D video graphics. VIA acquired S3 Graphics in 2001 with the intention of accelerating the integration of graphics capabilities with its processors and chipsets.
S3 Graphics became undercapitalized in 2005, at which point VIA decided to bring in WTI Investment International Ltd as a new investor to help fund the company.
WTI is a private investment firm headed by Cher Wang (王雪紅), chairperson of both VIA and HTC.
Under the terms of the S3 Graphics transaction, VIA will receive US$147 million from HTC, while WTI will receive US$153 million, according to a VIA statement.
In March, HTC invested US$10 million to acquire an 11.1 percent stake in the fast-growing Taiwanese online music service provider KKBOX Inc, which has services in Hong Kong and Japan and is eying possible inroads into China, Malaysia and Singapore.
In February, HTC spent US$48 million on Saffron Media Group Ltd, which develops software for delivering content via the Internet, and US$40 million on games-on-demand provider OnLive Inc to help HTC attract users to its tablets and smartphones.
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