Creative Technology Ltd today announced it has entered into an agreement with Intel Corporation for Intel to license certain technology and patents from ZiiLABS Inc. Ltd, a wholly-owned subsidiary of Creative, and acquire certain engineering resources and assets related to its UK subsidiary ZiiLABS Limited (formerly known as 3DLABS Limited).

The US$50 million deal includes US$20 million to Creative for the licensing of certain technologies to Intel relating to ZiiLABS' high performance GPU technology. The second part of the deal is US$30 million to Creative for the transfer of certain engineering resources and assets in the UK subsidiary to Intel. The UK subsidiary is a design entity engaged in, primarily on behalf of ZiiLABS Inc. Ltd, the development of various silicon solutions, including the ZMS chips for Creative. The transfer of engineering resources and assets will be through the divestment of the UK subsidiary by Creative.

"As the next generation advanced media processors beyond 28 nanometers become increasingly complex and expensive to develop we must find new models to work with our partners and customers to drive continued product innovation. 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. Moving forward, it will be more cost effective for Creative to outsource to third party contract chip-layout houses on future advanced chips for its products, while at the same time allowing Creative to focus on its core strength - the designing and marketing of more innovative and exciting products for our customers." said Sim Wong Hoo, CEO of Creative Technology.

ZiiLABS Inc. Ltd (still wholly-owned by Creative) will continue to retain all ownership of its StemCell media processor technologies and patents, and continue to supply and support its ZMS series of chips to its customers. It will also continue to develop devices incorporating the ZiiLABS ZMS-20 and the ZMS-40 media processors.

"Creative will continue to retain ownership of its formidable patent portfolio in the field of 3D graphics and media processing. We will be engaging in discussions to further monetize this valuable collection of 100 plus patents." added Sim Wong Hoo.

As part of the ongoing cooperation between the two companies, Intel recently partnered with Creative to design and develop an advanced motion sensing camera that can pick up human motion for interaction with high-powered computer games, as demonstrated at the Intel Developers Forum in September 2012. The companies also anticipate continuing their discussion on future technology for media-rich tablet products.

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