In an interesting announcement released after Taiwanese Stock Market closed for the day, VIA Technologies announced the sale of its stake in S3 Graphics to a rising mobile tiger HTC Corporation.

VIA acquired S3 Graphics in 2001 in the form of wholy owned subsidiary, but S3 became undercapitalized in 2005. In order to deal with the situation, Cher Wang, Chairman of VIA introduced WTI Investment International (also owned by Cher Wang) as a new investor the company.

The sale weighs in 300 million US dollars, out of which VIA stands to receive $147 Million, and a capital gain of $37 million. WTI will receive 153 million USD. As a part of the deal, VIA will be able to use the IP in their current and upcoming products.

Tzu-mu Lin, Senior VP and Board Director of VIA said that this "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."

This is not entirely an unexpected move. We have suspected for quite some time now that the time of Tile-Based Render graphics in mobile devices will come to an end as soon as computational requirements grow to PC level. It looks to us that HTC is reacting by purchasing a weak player that holds a nice chunk of IP which the company could use on future SOCs – licensing the S3 GPU IP to players such as Qualcomm, TI, Rockchip and others.