Graphics card and chip manufacturer 3dfx has been bought by arch-rival Nvidia after seeing a significant slowdown in demand for its Voodoo boards.
The $112m stock and cash acquisition sees Nvidia gain 3dfx patents, brand names and current inventory relating to its chip business. A lawsuit between the two companies has also been dropped. Nvidia said "substantially all" jobs would go at 3dfx.
3dfx was European gamers' favourite 3D graphics card in the mid-90s, but the company's fortunes have declined in recent years due to poor sales caused by delays, adverse reviews and faster-moving competitors. This, combined with this autumn's recent home PC sales slump, resulted in 3dfx posting a loss of $178.6m in the third quarter of 2000.
The merger leaves just a handful of companies designing graphics chips for PCs out of more than 20 that were in business just five years ago.
US analysts said 3dfx had done a lot of good work as the market developed in the mid-90s, but had failed to keep up with Nvidia in the technological race during recent years.
Alex Leupp, 3dfx chief executive, said: "We have experienced significant slowdown in demand for our products, especially the Voodoo 3 and Voodoo 5 boards. This slowdown is consistent with the overall slowness experienced by the PC market, especially in Western Europe."
Leupp told a news conference that selling the company was the best option available, although it had considered bankruptcy or a merger.
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