Introduction

I get knocked down, but I get up again

Looks like nobody's going to keep S3 down. Just a year ago, things were looking bad for the graphics company. They missed almost two entire product cycles in the 3D accelerator race, and ended up in the low-end market segment with products from Nvidia and 3dfx ruling the high end. (Try throwing the Virge chip at the Voodoo or TNT, and you'll get kicked down into the low end too.)

Almost a year ago in October of 98, S3's stock price dropped to a dismal 1½. Just two years earlier, the stock was at an all time high. Was S3 going to fade into the background like Trident? Not without a fight. The once mighty S3 wasn't doomed to fail as many predicted.

New Blood

S3 needed new management. In November of 98, they brought in Kenneth Potashner as the new President, Chief Executive Officer and Chairman. Potashner gained a reputation as a turnaround artist with his work at Maxwell Technologies. With over 400 able employees and a decade of industry experience, S3 refocused and went back to work.

A month later, S3 signed a 10-year cross-license agreement with Intel "for all S3 and Intel patents for development of certain semiconductor products, a bus license for current and future Intel general purpose processors, and the selection of S3 as an Intel AGP 4X validation partner. S3 also announced that Intel is to purchase warrants to buy S3 shares under undisclosed terms." S3 just happened to develop a .18 micron chip right after announcing the Intel deal.

And an Acquisition

Just two months ago, S3 revealed that they had a sizeable $500 million war chest in the form of 252 million shares of United Microelectronics Corporation (UMC), a large Taiwanese semiconductor foundry. A week later, S3 announced that they were acquiring Diamond Multimedia in a stock swap. The Diamond acquisition gives S3 a piece of the home networking market, the Rio player along with rioport.com, and another strong brand in the graphics and sound card market. Don't worry, S3 isn't leaving the graphics industry behind, but it's nice to have some other dishes on the table when you have 3dfx and Nvidia eyeing your bread and butter.

S3 let us in on their plans for the high-end 3D accelerator market. Everyone's heard rumors about S3's next generation .18 micron "GX4" chip, but we have the real specs straight from the source. S3 is calling the chip the Savage2000.