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S3-Via JV hits Taiwanese gov't roadblock

Red tape delay - or will the new administration block the deal?

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Bureaucratic wranglings in Taiwan's government have held up the proposed joint venture between S3 and Via, the duo admitted yesterday.

Both companies are waiting for Taiwan's regulators to approve the JV, which has already had the blessing of the US authorities. The alliance was originally expected to have been completed by the end of June.

S3 and Via played down the delay, telling US newswires that Taiwan's regulatory approval "always takes quite a bit of time". This seems to have been exacerbated by the arrival of a new Taiwan government in March.

In other words, the deal appears be getting tied up in red tape. Then again, the two companies' joint statement notes that "the Taiwan government indicated that VIA may submit additional information and S3 and Via may choose to modify the deal structure in response to the government's correspondence with Via".

That sounds to us like the issue isn't entirely one of governmental confusion, but that Taiwan's authorities have issues with the JV. There certainly appears to be a political dimension to the delay. S3 CEO Ken Potashner said: "We believe that the new Taiwan government should be taking positions supporting hi-tech partnerships between Taiwan and global corporations, and we hope that the new Taiwan government will not cause harm to US or international corporations."

That's an overtly political statement if there ever was one and implies a certain cooling of the new Taiwanese administration to overseas companies.

Via paid S3 $377 million to buy its graphics chip business which it uses in some of the chipsets it builds. ®

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Mike Magee contributed to this report

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