Intel, S3 In Cross-licensing Pact

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December 18, 1998 (12:00 AM EST)

By Marcia Savage ,

Graphics-chip maker S3 announced a deal with Intel Thursday that includes a broad, 10-year cross-licensing agreement for all S3 and Intel patents for development of certain semiconductor products.

The arrangement also includes a bus license for current and future Intel processors, and the selection of S3 as a validation, or development partner, with Intel on 4xAGP technology. Specific terms of the agreement were not disclosed.

Rick Bergman, vice president of marketing at S3, based in Santa Clara, Calif., said the agreement will give VARs a lot more choices as graphics and chip sets become integrated.

"When these levels of integration occur, right now, it's pretty much Intel in the chip-set area, and as graphics and chip sets get integrated together, it's important for them to have choices," he said. "We are seeing lower and lower price points in PCs, and higher levels of integration are occurring. S3 will be right there in the mix as that occurs through 1999."

In a prepared statement, Ken Potashner, president and CEO of S3, said, "Through this multifaceted agreement with Intel and its 1999 product road map, S3 intends to re-establish its position as the No. 1 supplier to high-volume OEMs and add-in card manufacturers."

S3 also said Santa Clara-based Intel will purchase warrants to buy S3 shares, which Bergman said represented "a cementing of the strategic relationship between the two companies."

As a partner with Intel on the 4xAGP technology, Bergman said S3 will "be working jointly with Intel to make sure we bring 4xAGP as quickly to the marketplace as we can. We expect a significant percentage of the systems in the second half of 1999 to be shipping with 4xAGP."