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Trades 30 percent of its USC equity for $70 million in bid to shore up market position in PC graphics
HSINCHU, TAIWAN - S3 Inc. is selling off 30 percent of its equity stake in joint-venture foundry United Semiconductor Corp. (USC), located here, in a cashraising exercise to solidify its position in the increasingly treacherous PC-graphics market.
S3 (Santa Clara, Calif.) is selling 80 million of its USC shares to the investment arm of United Microelectronics Corp. (UMC), the foundry that is the anchor partner in USC. S3 will receive about $70 million-$40 million after taxes-for reducing its stake in one of Taiwan's most advanced IC fabrication facilities.
Chief financial officer Walt Amaral said S3 began considering this move several months ago, before he joined the company. The idea was sparked by whispers that USC stock was trading on Taiwan's "gray market" for as much as $NT90 (New Taiwan dollars), Amaral said.
The deal is losing value as Asian currencies weaken; initially worth $72 million, the sale will fall to $70 million in value by the time it closes, Amaral guessed. He said that S3 had tried to negotiate the sale in U.S. dollars but that...