S3-VIA Graphics Merger Delayed

The sale of S3's graphics division to VIA Technologies - already approved by US officials and previously expected to be complete by July - has hit a new delay. S3 announced today that the US$323 million deal has been held up by the Taiwanese government for further consideration.

Ken Potashner, S3's CEO and chairman, said, "We believe that the new Taiwan government should be taking positions supporting high-tech partnerships between Taiwan and global corporations, and we hope that the new Taiwan government will not cause harm to US or international corporations.''

Earlier this year, S3 decided to sell its graphics unit. S3's Savage 3D graphics chip line was recently included in the Diamond Viper II card. The move is part of S3's effort to refocus its business on the consumer digital device market, which it entered last year with the acquisition of Diamond Multimedia.

VIA's primary business is to create AMD and Intel processor-ready chipsets for integration into motherboards, though it is increasingly looking to integrate graphics functions into its line and has plans to release an economical processor, the Cyrix III. Earlier this week, VIA settled a patent-infringement suit with Intel over its competing chipset designs that work with Intel processors. VIA claims to now hold about 35 percent of the chipset market, compared to Intel's 45 percent.