Drawing ever closer to its new technology partner, Via Technologies Inc. has increased its stake in graphics-IC maker S3 Inc.
The move, which was disclosed last week when Via bought 10.8 million S3 shares at $13.50 apiece, increases Via's equity position in the company to 14.9% at a cost of more than $145 million.
The investment, which follows a decision by S3 last year to share its graphics technology with Via, is expected to "strengthen the partnership and collaboration" between the companies, and will most likely fuel development of new technology.
S3 is seen as an attractive partner for Via as the Taiwanese company continues to advance its core-logic chipset roadmap, which includes devices with integrated graphics capabilities.
"The investment by Via Technologies in S3 is yet another demonstration of the growing collaboration between our two companies," said Ken Potashner, chief executive of S3, Santa Clara, Calif. "The technology and IP available between our two companies have positioned us to aggressively compete in the value-PC segment through the strategy of integrating our technologies."
Via president and chief executive Wen-Chi Chen said S3's technology will help the companies fulfill mutual goals within the PC market, but said he also saw value in S3's communications and financial assets.
Already, S3 and Via are collaborating in the production of core-logic chipsets, which is being spearheaded by S3-Via Inc., a joint venture established by the two companies. S3-Via's first family of integrated graphics and core-logic chipsets are expected to hit the market early in 2000. To facilitate that objective, the two companies last week created a joint management team headed by Potashner as chairman and Chen as chief executive.
"With its first chip nearing production, several top-tier OEM customers already on board, and a management team established, we expect S3-Via Inc. to establish itself as a leading components supplier for low-cost PCs-the fastest-growing segment of today's PC market-by mid to late 2000," Potashner said.
Meanwhile, S3 is pushing to increase revenue from its other operations. The company is concluding moves to acquire Number Nine Visual Technology Corp., which is trying to emerge from bankruptcy and is a supplier of S3 products to IBM Corp. By buying Number Nine, S3 hopes to strengthen its relationship with IBM while improving its multimedia division's competitive advantage, said Arnab Chanda, an analyst at Robertson Stephens Inc., San Francisco.
"The acquisition will allow S3 to consolidate the distribution of its graphics products to IBM and strengthen the two companies' relationship with each other," Chanda said. It will also "increase S3's hardware and software engineering resources by adding to the company's current resources and teams."