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Intel pays Creative $50m for ZiiLabs GPU licence, people

Small change for one firm, lifeblood for the other

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Creative Labs is to all sell parts of its graphics chip wing, ZiiLabs, to Intel for $50 million (£31.4 million).

The deal involves a $30 million payment for “certain engineering resources and assets” from ZiiLabs' UK operation and a further $2 million for “the licensing of certain technologies... relating to ZiiLabs' high performance GPU technology”.

Singapore-based Creative stressed that ZiiLabs will remain one of its wholly owned subsidiaries and that it is keeping hold of the ARM-based ZMS application processors and StemCell media chips developed by ZiiLabs, which it will continue to sell and support.

It said that “it will be more cost-effective for Creative to outsource to third-party contract chip-layout houses on future advanced chips for its products”, which suggests that it’s its in-house resources of this kind - what Creative calls "a design entity engaged in... the development of various silicon solutions" - that have been sold to Intel.

So all this is more about Intel acquiring chip development expertise than buying into the ARM world. For the chip giant, $50 million is small change, but it's lifeblood for Creative. It has been shedding the stuff for some years - it lost $4.5 million in the three months to 30 September 2012, its most recently completed quarter - now as demand for its once-famous SoundBlaster technology and its media players has dried up.

Increasingly, Creative has turned to licensing its intellectual property portfolio in a bid to make ends meet.

ZiiLabs was established in 2009 out of 3DLabs, a graphics chip pioneer formed in 1994 through a management buyout DuPont’s DuPont Pixel subsidiary. 3DLabs was acquired by Creative in 2002. ®

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