Creative, Intel strike pact worth $50M

Singapore's Creative Technology will be licensing its chip technology as well as selling off its U.K. subsidiary ZiiLabs Limited to Intel as part of a US$50 million deal, even as it streamlines its business to focus on its core strengths.

In a statement issued Tuesday, Creative said Intel will pay US$20 million to license certain high-performance GPU technology owned by its subsidiary ZiiLabs Inc. The remaining US$30 million will be for the transfer of engineering resources and assets of ZiiLabs Limited, formerly known as 3DLabs, as Creative divests its business in the U.K, it stated.

ZiiLabs Limited designs and develops silicon, including the ZMS chips, for ZiiLabs Inc, but the Singapore company has found it more cost-effective to outsource this part of the business to third-party service providers.

"As the next-generation advanced media processors beyond 28 nanometers (nm) become increasingly complex and expensive to develop, we must find new models to work with our partners and customers to drive continued product innovation," said Sim Wong Hoo, CEO of Creative Technology.

"With this announcement, we gain increased flexibility with the ability to partner with multiple semiconductor companies on advanced design and process technologies, allowing us to mitigate risk while maintaining control over the long-term direction of our product portfolio."

Creative will also continue to monetize its "formidable" portfolio of over 100 patents, which includes 3D graphics and media processing, he added, as it streamlines its business and tries to recover from 14 straight quarters of losses.

This transaction is expected to be completed in the current quarter ending December 2012, the company stated.

Sim had earlier announced Creative will be focusing on its audio products, which is its core strength, and its tablet device HanZpad which was launched by ZiiLabs Inc and targets China's education market.