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January 30, 1997updated 05 Sep 2016 12:40pm

3DO AND SAMSUNG IN $30M SEMICONDUCTOR JOINT VENTURE

By CBR Staff Writer

Following its September announcement (CI No 3,000) that it was exiting the hardware business in an attempt to become a software-only organization, once high-flyer 3DO Inc has found a new home for its now superfluous design engineers – a $30m custom semiconductor joint venture with South Korean electronics giant Samsung Electronics Co, Ltd. Samsung is providing all the cash for the new company, which is to focus on high-performance graphics, audio, and video devices for use in consumer products. In addition, Samsung will jump-start the thing with a preferential six-year semiconductor fabrication agreement, 40 employees from its San Jose operation, and its Multimedia Signal Technology. For its part, 3DO is contributing 80 engineers for its rapidly shrinking hardware unit, plus various 3-D, digital, video and audio technologies. The company is to be based in Silicon Valley. Trip Hawkins, 3DO’s chairman and CEO, claims the move frees 3DO management to conserve our cash and publishing only the best software titles. 3DO crashed after consumer indifference to its Interactive Multiplayer games and infotainment console. The September restructuring stripped out a third of 3DO’s then 450 employee roster, and forced Hawkins to surrender day to day running of the company to its president, Hugh Martin. The move-to-software strategy seems to be stemming the red ink flow, at least: in November 3DO reported mid-term net losses had fallen to $3.6m from $16.7m the previous year, on revenue up 194.4% at $42.1m. The news came as 3DO announced that for its third quarter revenue was up to $21.4m, up from $8.9m for the same period last year, with profits of $2.9m compared to losses of $19.1m. The company noted that the revenue increase was largely due to recognizing $17.7m licensing fees from Matsushita Electric Industrial Co, Ltd, for 3DO’s 64-bit M2 graphics technology. And, while software publishing revenue was up in the three month period, from $1.7m to $3.7m, the better balance sheet also reflects lower R&D expenses on hardware, so that expenses fell from $17.8m to $16.3m.

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