I thought that S3 is a matter of glory gone by, so that you think it is a possible buyer seems a bit odd to me. Probably did they get their profit in a different market than the one for graphX cards in that case.

I remember I used a Virge DX in my good old AMD K6 pc, but afterwards I never heard of them anymore, when it comes to seperate graphics boards (exept for some motherboard related components like chipsets, I think).
It would be a boost for Philips if they did it, and a chance to get the strength to hold against Sony (their arch enemy). The problem though that Sony's whoop-ass towards Philips on the tv market has brought the latter company into a financial state that does not allow any "colonisation" of the market for IT related electonics, which is on the other hand a necessarity if Philips wishes to survive (they can't live on bulbs, lol). Thus, from a theoretical point of view, Philips should whoop-ass Sony on this point if they wish to have any chance on long-term success. But as said before, it is simply impossible for Philips to so, because on the lamp market they aren't alone anymore so to speak (amomng others: Osram, and nationwide companies like Gamma and Calex), neither on the electronics market (think of Sony, Samsung, LG, ...), and they are already struggling to survive in their current areas of activity. So the company can't react properly to the "expand or be extinguished" status it is having.
BTW, the stuff I wrote above is my personal view, so it is not based on any (analystical) sources.