Sale of S3 graphics unit held up by Taiwan officials

S3 said its plan to sell a majority financial interest in its graphics chip business to Taiwan's Via Technologies is being held up by a delay in approval from the Taiwanese government.

The companies did not give a new timetable for the $323 million deal, which had been expected to close this month. Under the proposed deal, S3 would transfer its graphics chip business to a joint venture in which Via would have the primary financial stake.

"We believe that the new Taiwan government should be taking positions supporting high-tech partnerships between Taiwan and global corporations, and we hope that the new Taiwan government will not cause harm to U.S. or international corporations," S3 chief executive Ken Potashner said in a statement released late yesterday.

A Via spokesman in Taiwan said the Ministry of Economic Affairs wanted more information about the financial effect and risks of the deal.

S3 said earlier this year that it was exploring options to split its graphics unit from its business of selling digital audio players and home networking gear. In April, it announced the deal with Via; S3 had already been working on PC chipsets that would integrate its graphics functions with Via's core logic.

Work with S3 on the integrated chipsets is continuing, confirmed the Via spokesman.

"Both S3 and Via are committed to successful completion of this transaction and plan on working with the government to achieve support for the joint venture," S3 reported in a statement.

Taiwan.CNET.com's Jack Kuo contributed to this report.