<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM S3
INCORPORATED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1998 AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               DEC-31-1998
<CASH>                                          31,022
<SECURITIES>                                    88,553
<RECEIVABLES>                                   30,389
<ALLOWANCES>                                     6,525
<INVENTORY>                                     11,383
<CURRENT-ASSETS>                               197,178
<PP&E>                                          45,687
<DEPRECIATION>                                  23,295
<TOTAL-ASSETS>                                 325,801
<CURRENT-LIABILITIES>                           44,934
<BONDS>                                              0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             5
<OTHER-SE>                                     163,525
<TOTAL-LIABILITY-AND-EQUITY>                   325,801
<SALES>                                        224,639
<TOTAL-REVENUES>                               224,639
<CGS>                                          226,711
<TOTAL-COSTS>                                  226,711
<OTHER-EXPENSES>                               161,827
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               6,235
<INCOME-PRETAX>                              (142,629)
<INCOME-TAX>                                  (11,956)
<INCOME-CONTINUING>                          (130,673)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 (113,204)
<EPS-PRIMARY>                                   (2.22)
<EPS-DILUTED>                                   (2.22)