HTC buys graphics IP from VIA. Here’s why

Mobile phone manufacturer HTC has purchased VIA Semiconductor’s graphics business. The deal is indicative of the need for compelling graphics for today’s version of entertainment and computing as well as an admission that mobile device makers may get an edge if they can bring some silicon capabilities in-house. Let’s call it the iPhone (s aapl) effect.

HTC purchased S3 Graphics from VIA in a deal valued at $300 million. VIA still has the rights to use the technology and IP associated with S3 in its chips. VIA is a maker of low-power, x86-based chips that are used in set-top boxes, mobile devices and laptops. It had acquired S3 Graphics in 2001 to integrate graphics capabilities with its processor and chipset products. That was ahead of AMD (s amd) buying graphics chipmaker ATI in 2006 and Qualcomm (s qcom) buying the mobile graphics division of AMD in 2009. It was also before graphics maker Nvidia (s nvda) got serious about bringing GPUs to mobile devices that resulted in its first mobile chip in 2008.

The graphics edge

A decade after the deal, it’s clear graphics capability is a leading differentiator among device makers as consumers watch more movies, surf more picture-laden websites and generally view the web not only as a medium for reading, but for sharing photos, viewing maps, skimming infographics and any number of visually intense activities.

The deal, announced as HTC comes of a hot quarter where revenue grew by 104 percent from the previous year and net income doubled to $607.26 million, could also be a result of Apple’s influence on the handset market. Apple has developed its own silicon for its phones and tablets, and Samsung has been working on a similar tactic. Perhaps HTC realized vertical integration might be the way to go in mobile development and wanted to lock down some graphics capabilities for a reasonable cost.