HTC announced today that it has agreed to acquire S3 Graphics from VIA Technologies and WTI Investment in a deal worth $300 million. Expected to close at the end of this year, the transaction is still pending regulatory approval and would see HTC obtain all outstanding shares of S3 Graphics along with the firm's intellectual property and associated patents. Although the patents will technically change hands, HTC will grant VIA free access to the IPs. VIA will receive $147 million and WTI will bag the remaining $153 million.

Founded in 1989, S3 doesn't grab many headlines these days. The outfit is most recognized for its TRIO 2D graphics cards but slipped off the map toward the late 90s after some missteps during the rise of 3D graphics. S3's chips were generally a notch below competing products and by 2001 the firm decided to sell its business to VIA for $323 million. Naturally, VIA went on to incorporate S3's technology in its various embedded solutions.

HTC hasn't clearly outlined what it intends to do with S3, but many believe the handset maker will use the graphics firm's portfolio of 235 patents as legal leverage against others in the smartphone space. S3 recently filed a patent infringement suit against Apple and on July 1, an International Trade Commission judge ruled in S3's favor, determining that Apple infringed on two patents involving image compression and data formats.

Legal maneuvering and patent shenaniganry aside, HTC might also have plans to develop its own system-on-a-chip (such as Apple's A4 and A5), but the company doesn't currently have a license to make ARM-based processors. Time will tell.