HTC announced yesterday that it was buying S3 Graphics from VIA and its partner in the operation. We speculated at the time that the purchase might be a build up to the company making its own GPUs. If you were like me and hoping that was the case, you will be disappointed. HTC has announced that it purchased S3 simply for the patents. It looks like HTC is set to pull a Microsoft and troll the patent waters.
HTC expects to recoup the investment in S3 in two to three years. It’s interesting that stock in HTC dropped on news of the purchase. HTC’s Winston Yung has admitted as well that the patents will give it more leverage over Apple, who has been found to infringe on two S3 patents, in the ongoing patent battle between the two firms. The purchase netted HTC 235 new patents.
“In patent negotiations, it is difficult if the other company has patents and you don’t. If you have patents too, perhaps you can arrive at a cross-licensing agreement … We’re not talking about five years before we will see financial benefits and returns, we’re talking about using these patents to start generating revenue now” Winston Yung, HTC
HTC will use the patents both “defensively and offensively” and we can likely expect a hoard of new suits to show up eventually connected to the purchase. HTC is planning lots of purchases this year, having already invested in Saffron Digital back in February and holding a big stake in OnLive Inc for cloud gaming.