Silicon & Software Systems (S3) an Irish subsidiary of Philips Electronics, has closed a € 10 million investment deal with ACT Venture Capital.

The deal involves Philips significantly diluting its stake in the firm, which will effectively change from being a subsidiary of a large multinational to an indigenous Irish company. Philips will retain a strategic shareholding in the company through Philips Electronics Ireland Ltd and will continue to be a major customer of S3.

S3 was founded in 1986 and provides integrated circuits and embedded software to other technology companies. Its clients include Texas Instruments, Lucent Technologies, Philips, Toshiba, STMicroelectronics and Sky. The company intends to use the funding for international expansion, primarily in the Asian market where it currently does about 5 per cent of its business. "Asia has become a centre of gravity for the consumer electronics and wireless industries," said John O'Brien, chief executive of S3. "A lot of our customers have gone there so in a way we are following them but we also see a lot of new opportunities for S3 there."

Mr O'Brien said the investment involves a three-way deal between Philips, ACT and S3 staff although he would not give a breakdown of the new ownership. He said there would be "a broad-based incentive scheme across the company" to distribute shares to employees.

S3 employs 300 people worldwide, with 185 based in Dublin. It also has offices in the US, the Netherlands, Poland, Czech Republic and Britain.

It carries out advanced silicon chip design on behalf of its clients and also develops software that is embedded into electronic devices.

It has recently developed products to facilitate TV viewing on mobile phones and a broadband access product for Intel.