The two firms this week have formed a joint venture, tentatively titled S3-Via, that will focus on making "integrated" chipsets for PCs and notebooks. Chipsets work as a communications hub inside a PC.
Via is currently locked in a series of vicious and highly publicized intellectual property lawsuits with Intel. Via is selling Intel-compatible chipsets, but Intel is suing them for it and also suing some companies that are buying Via's chipsets.
But S3 has a valid cross-licensing agreement with the chip giant. With a joint venture, Via and S3 can develop a product that combines Via's disputed chipset technology with S3's graphics know-how and be protected from law suits because of S3's licensing deal.
Although integrated chipsets do not offer optimal graphics, these parts are gaining in popularity because of the cost savings--which can amount to $50 or more by the time a computer gets to store shelves--that integration can provide. The first Via-S3 products, which will be demonstrated at the Comdex trade show, will come out in early 2000, according to Jonathan Chang, director of U.S. operations for Taiwan-based Via.
"With S3's technology, we will be able to extend from the value line to the middle segment" of the PC market, he said. Via will also demonstrate its first Celeron clone processors at Comdex, which starts November 15 in Las Vegas. Eventually, Via will also make integrated processors as well as more chipsets for AMD's Athlon platform.
"[S3 is] able to do chipsets. That is part of the major factors of the deal," said Chang. "Another major reason is that S3 has great graphics."
A deal also comes at an opportune time for the upstart Taiwanese company. Chipset sales rose 135 percent in October, compared to the same period a year ago and 70 percent compared to September, Via announced today. Companies that have picked up Via's chipsets in recent weeks include IBM, Compaq Computer, HP, and Micron.
The popularity comes for two reasons, said Chang and others. One, the Via chipset comes with faster system buses than most current Intel chipsets. Two, the Via chipsets work with 133-MHz memory, an increasingly popular and cheap form of PC memory. Intel chipsets are geared toward slower 100-MHz memory or expensive Rambus memory. The Rambus chipsets have also been repeatedly delayed.
The S3 deal is not Via's first attempt to get around its dispute with Intel. Some Via chipsets, for instance, are made at National Semiconductor's factories and cobranded by National. The dual brand insulates Via from liability, the company has asserted. Others have called the theory interesting but added that the defense has yet to be tested.
Intel, among other companies, also sells integrated chipsets for desktop PCs. Next year, the company will release a product called "Timna" which melds a processor core, chipset functions, and a graphics engine into a single piece of silicon.
"With the backing of two of the strongest components suppliers in the PC market, we expect the newly formed company to play a significant role in the evolution of PC graphics over the next few years," said Ken Potashner, chief executive officer of S3.