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

Small change for one firm, lifeblood for the other

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. ®