HTC Buys Chip Designer, Beefs Up on Patents

HTC on Wednesday purchased chip designer S3 Graphics and its patents, as the company works to defend itself from patent infringement lawsuits.

The Taiwan-based company will pay $300 million to VIA Technologies and investment firm WTI Investment International for the Fremont, Calif.-based S3. S3 makes image-compression technology for smartphones, tablets and Sony and Nintendo video game consoles.

The acquisition helps HTC in two ways. First, HTC will get 235 patents with the purchase, which may protect it from other companies' patent infringement claims in what has become a lawsuit-laden smartphone industry.

HTC will also gain direct access to technology to improve graphics capabilities on its devices, allowing the company to greatly improve its already-thriving smartphone line. HTC broke company sales records this past quarter of its Android-enabled devices. The company's net income more than doubled to $17.5 billion in the second quarter of this year because of phones like the Desire HD, Sensation and Thunderbolt.

"Buying a patent portfolio will be very useful to us," said HTC CRO Winton Yung.

The S3 purchase will help HTC stand strong against rival Apple. HTC and Apple for over a year have butted heads about patent infringement. In May 2010, Apple filed a lawsuit against HTC claiming the company infringed on nearly two dozen Apple patents for its iPhone, including architecture and interface.

HTC retaliated with a claim of its own, filing a lawsuit with the International Trade Commission accusing the Cupertino, Calif.-based company of infringing on HTC patents. The company asked the ITC to not allow Apple's devices to be sold in the U.S.

By buying S3, HTC keeps up with the competition, which also purchases patents to use as both ammunition and armor against other companies. A group of corporations, including Apple, Research in Motion, Sony and Microsoft collectively purchased Nortel Networks' patents for $4.5 billion last week. The companies plan to divide the 6,000-plus patents, which cover areas such as wireless, 4G technology, Web search, social networking and data networking.

The business is turning into a patent warzone and companies are ramping up purchases to combat intellectual property attacks. HTC's purchase of S3 not only helps it protect the technology it now owns, but also helps defend it from other companies looking to sue the increasingly successful device maker.

HTC Buys Chip Designer, Beefs Up on Patents originally appeared at Mobiledia on Thu Jul 07, 2011 11:04 am.

Source: http://www.mobiledia.com/news/97071.html

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