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S3 sells graphics chip business to Taiwan's Via Tech

Multimedia software maker S3 said on Tuesday it will sell its personal computer graphics chip business to a newly formed joint venture with Taiwan's VIA Technologies for about $323 million in cash and securities.

As part of the agreement S3 will sell 3 million shares of its stock to VIA Technologies at a price coinciding with the signing of the definitive agreement.

The Santa Clara, Calif.-based S3 said the VIA transaction is expected to be completed prior to its third quarter and customers should not expect disruptions of any kind.

S3 also said it is exploring alternative strategies, including partnerships and joint ventures, relative to its ongoing multimedia board business. S3 also said it has realigned its existing business to focus on its Internet-related business.

“With this announcement, we have effectively completed the first phase of our long-term growth plan, transforming S3 from a graphics focused semiconductor supplier to a well-positioned Internet appliance company with leadership product and substantial financial resources,” Ken Potshner, chief executive officer and chairman of S3, said in a statement.

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