Following rumours that S3 plans to sell off its graphics operations, Taiwanese chip maker Via Technologies has emerged as the leading suitor.
Earlier last week, S3 confirmed it was in discussions with several companies regarding the sale of its graphics business, but declined to comment further.
AMD had been linked to the company, but market watchers in Silicon Valley believe that Via is the front runner because it already has a joint venture with S3 which has been going since the end of last year.
Although unable to confirm or deny the rumours, Neil McGuinness, an S3 representative, said a takeover would be the "logical step for the company."
McGuinness also confirmed that both NVidia and Via have been mentioned, but said S3 may even spin the division off into a separate company.
Via's profit grew 218 per cent for its first quarter ended 31 March, compared to the same period last year. Via has also purchased a number of companies over the past 18 months.
Meanwhile, Jerry Sanders, chief executive at AMD, said last week that the company expects to report record sales totalling more than $1bn (£625m) for its first quarter.
Strong sales growth in all product categories accounted for the revenue growth, Sanders said. Flash memory products and PC processors, particularly AMD's Athlon chip, broke unit and revenue records, he said. The company also reached its goal of selling 1.2 million Athlon processors in the first quarter, Sanders said. Intel is expected to report its first-quarter earnings on 18 April.
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