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HTC Buys Chip Designer S3 Graphics, For Securing patent Defense Against Apple

You have noticed of massive battle going on between Samsung and Apple over patent violations. The news has been a popular topic over the last couple of months and it seems that HTC has been paying attention. The company has purchased S3 Graphics, according to reports from Bloomberg.

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HTC Corp. (2498) agreed to purchase S3 Graphics Co. giving Asia’s second-largest smartphone maker access to patents as it defends against infringement lawsuits from Apple Inc. (AAPL)

HTC will pay $300 million cash for the Fremont, California- based provider of image-compression technology used in Nintendo Co.’s Wii and Sony Corp.’s PlayStation machines, Chief Financial Officer Winston Yung said in Taipei today. The sellers are VIA Technologies Inc. (2388), which has a 12.5 percent stake, and WTI Investment International Ltd., a holding company controlled by VIA and HTC’s Chairwoman Cher Wang.

This purchase not only adds a graphics company to HTC’s stable, it also shores up the company’s position when it comes to patent disputes with Apple. You may recall that last year HTC, the world’s number one Android phone manufacturer, was brought to task by Apple on various multitouch patents with over 20 suits against HTC products. This experience reportedly ‘shocked’ HTC and most likely made them very aware of their vulnerable position when it came to patent holdings. That was followed by a filing by Apple against HTC in June, asking the ITC to block imports of HTC phones.

“Buying a patent portfolio will be very useful to us,” Yung said, declining to comment on specific lawsuits.

HTC climbed 3.3 percent to close at NT$1,095 in Taipei today before the company announced the acquisition and second- quarter earnings. The shares have gained 22 percent this year.

VIA, a Taipei-based designer of chips used in computers, will receive $147 million from the sale and recognize a $37 million gain, it said in a statement today. WTI will get $153 million, with the difference in values explained by the two owners holding different classes of share, HTC’s Yung said.

HTC will acquire a total of 235 patents along with S3, mostly related to graphics. The patent ruling against Apple in favor of S3 is still subject to review by the ITC at this time.

Source: 1, 2
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