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                                                                EXHIBIT 3(i).3




                           CERTIFICATE OF DESIGNATION

                   OF SERIES A PARTICIPATING PREFERRED STOCK

                                       OF

                                S3 INCORPORATED




         We, Gary J. Johnson, the President and Chief Executive Officer, and
Ronald T. Yara, the Secretary, of S3 Incorporated, a corporation organized and
existing under the General Corporation Law of the State of Delaware, DO HEREBY
CERTIFY:

         That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the said Board of
Directors on May 14, 1997, adopted the following resolution creating a series
of 500,000 shares of Preferred Stock designated as Series A Participating
Preferred Stock:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of its
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are as follows:

         1.      Designation and Amount.  The shares of such series shall be
designated as "Series A Participating Preferred Stock," par value $0.0001 per
share, and the number of shares constituting such series shall be 500,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided, that no decrease shall reduce the number of shares of
Series A Participating Preferred Stock to a number less than that of the shares
then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.

         2.      Dividends and Distributions.

         (A)     Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends, the
holders of shares of Series A Participating Preferred Stock in preference to
the holders of shares of Common Stock, par value $0.0001 per share (the "Common
Stock"), of the Corporation and any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
first day of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing on
the first Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series A Participating Preferred Stock in an amount
per share (rounded to the nearest cent) equal to the greater of (a) $25.00, or
(b) subject to the provision for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash dividends, and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
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reclassification or otherwise), declared on the Common Stock, since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Participating Preferred Stock.  In the event
the Corporation shall at any time after the close of business on June 1, 1997
(the "Rights Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (iii) combine the outstanding Common Stock into a smaller number of shares,
by reclassification or otherwise, then in each such case the amount to which
holders of shares of Series A Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

         (B)     The Corporation shall declare a dividend or distribution on
the Series A Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share
on the Series A Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.

         (C)     Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Participating Preferred Stock unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series A Participating Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date.  Accrued but unpaid dividends shall not
bear interest.  Dividends paid on the shares of Series A Participating
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.  The Board
of Directors may fix a record date for the determination of holders of shares
of Series A Participating Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.

         3.      Voting Rights.  The holders of shares of Series A Participating
Preferred Stock shall have the following voting rights:

                 (A)      Subject to the provision for adjustment hereinafter
         set forth, each share of Series A Participating Preferred Stock shall
         entitle the holder thereof to 1,000 votes on all matters submitted to
         a vote of the stockholders of the Corporation.  In the event the
         Corporation shall at any time after the Rights Declaration Date (i)
         declare any dividend on Common Stock payable in shares of Common
         Stock, (ii) subdivide the outstanding Common Stock into a greater
         number of shares, or (iii) combine the outstanding Common Stock into a
         smaller number of shares, by reclassification or otherwise, then in
         each such case the number of votes per share to which holders of
         shares of Series A Participating Preferred Stock were entitled





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         immediately prior to such event shall be adjusted by multiplying such
         number by a fraction the numerator of which is the number of shares of
         Common Stock outstanding immediately after such event and the
         denominator of which is the number of shares of Common Stock
         outstanding immediately prior to such event.

                 (B)      Except as otherwise provided herein, in the
         Certificate of Incorporation or by law, the holders of shares of
         Series A Participating Preferred Stock and the holders of shares of
         Common Stock and any other capital stock of the Corporation having
         general voting rights shall vote together as one class on all matters
         submitted to a vote of stockholders of the Corporation.

                 (C)      (i)  If at any time dividends on any Series A
         Participating Preferred Stock shall be in arrears in an amount equal
         to six quarterly dividends thereon, the holders of the Series A
         Participating Preferred Stock, voting as a separate series from all
         other series of Preferred Stock and classes of capital stock, shall be
         entitled to elect two members of the Board of Directors in addition to
         any Directors elected by any other series, class or classes of
         securities and the authorized number of Directors will automatically
         be increased by two.  Promptly thereafter, the Board of Directors of
         this Corporation shall, as soon as may be practicable, call a special
         meeting of holders of Series A Participating Preferred Stock for the
         purpose of electing such members of the Board of Directors.  Said
         special meeting shall in any event be held within 45 days of the
         occurrence of such arrearage.

                 (ii)  During any period when the holders of Series A
         Participating Preferred Stock, voting as a separate series, shall be
         entitled and shall have exercised their right to elect two Directors,
         then and during such time as such right continues (a) the then
         authorized number of Directors shall be increased by two, and the
         holders of Series A Participating PreferredStock, voting as a separate
         series, shall be entitled to elect the additional Directors so
         provided for, and (b) each such additional Director shall not be a
         member of any existing class of the Board of Directors, but shall
         serve until the next annual meeting of stockholders for the election
         of Directors, or until his or her successor shall be elected and shall
         qualify, or until his or her right to hold such office terminates
         pursuant to the provisions of this Section 3(C).

                 (iii)  A Director elected pursuant to the terms hereof may be
         removed with or without cause by the holders of Series A Participating
         Preferred Stock entitled to vote in an election of such Director.

                 (iv)  If, during any interval between annual meetings of
         stockholders for the election of Directors and while the holders of
         Series A Participating Preferred Stock shall be entitled to elect two
         Directors, there are fewer than two such Directors in office by reason
         of resignation, death or removal, then, promptly thereafter, the Board
         of Directors shall call a special meeting of the holders of Series A
         Participating Preferred Stock for the purpose of filling such
         vacancy(ies) and such vacancy(ies) shall be filled at such special
         meeting.  Such special meeting shall in any event be held within 45
         days of the occurrence of any such vacancy(ies).

                 (v)  At such time as the arrearage is fully cured, and all
         dividends accumulated and unpaid on any shares of Series A
         Participating Preferred Stock outstanding are paid, and, in addition
         thereto, at least one regular dividend has been





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         paid subsequent to curing such arrearage, the term of office of any
         Director elected pursuant to this Section 3(C), or his or her
         successor, shall automatically terminate, and the authorized number of
         Directors shall automatically decrease by two, and the rights of the
         holders of the shares of the Series A Participating Preferred Stock to
         vote as provided in this Section 3(C) shall cease, subject to renewal
         from time to time upon the same terms and conditions.

                 (D)      Except as set forth herein or as otherwise provided
         by law, holders of Series A Participating Preferred Stock shall have
         no special voting rights and their consent shall not be required
         (except to the extent they are entitled to vote with holders of Common
         Stock and any other capital stock of the Corporation having general
         voting rights as set forth herein) for taking any corporate action.

         4.      Certain Restrictions.

         (A)     Whenever quarterly dividends or other dividends or
distributions payable on the Series A Participating Preferred Stock as provided
in Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not

                 (i)  declare or pay dividends on, make any other distributions
         on, or redeem or purchase or otherwise acquire for consideration any
         shares of stock ranking junior (either as to dividends or upon
         liquidation, dissolution or winding up) to the Series A Participating
         Preferred Stock;

                 (ii)  declare or pay dividends on or make any other
         distributions on any shares of stock ranking on a parity (either as to
         dividends or upon liquidation, dissolution or winding up) with the
         Series A Participating Preferred Stock except dividends paid ratably
         on the Series A Participating Preferred Stock and all such parity
         stock on which dividends are payable or in arrears in proportion to
         the total amounts to which the holders of all such shares are then
         entitled;

                 (iii)  redeem or purchase or otherwise acquire for
         consideration shares of any stock ranking on a parity (either as to
         dividends or upon liquidation, dissolution or winding up) with the
         Series A Participating Preferred Stock provided that the Corporation
         may at any time redeem, purchase or otherwise acquire shares of any
         such parity stock in exchange for shares of any stock of the
         Corporation ranking junior (either as to dividends or upon
         dissolution, liquidation or winding up) to the Series A Participating
         Preferred Stock; or

                 (iv)  purchase or otherwise acquire for consideration any
         shares of Series A Participating Preferred Stock or any shares of
         stock ranking on a parity with the Series A Participating Preferred
         Stock except in accordance with a purchase offer made in writing or by
         publication (as determined by the Board of Directors) to all holders
         of such shares upon such terms as the Board of Directors, after
         consideration of the respective annual dividend rates and other
         relative rights and preferences of the respective series and classes,
         shall determine in good faith will result in fair and equitable
         treatment among the respective series or classes.





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         (B)     The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.

         5.      Reacquired Shares.  Any shares of Series A Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof.  All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.

         6.      Liquidation, Dissolution or Winding Up.

         (A)     Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock
unless, prior thereto, the holders of shares of Series A Participating
Preferred Stock shall have received per share, the greater of $1,000.00 or
1,000 times the payment made per share of Common Stock, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation Preference").
Following the payment of the full amount of the Series A Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Participating Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph (C) below to reflect such events as stock splits, stock dividends
and recapitalization with respect to the Common Stock) (such number in clause
(ii), the "Adjustment Number").  Following the payment of the full amount of
the Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Participating Preferred Stock and Common Stock,
respectively, holders of Series A Participating Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
the remaining assets to be distributed in the ratio of the Adjustment Number to
1 with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

         (B)     In the event there are not sufficient assets available to
permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Participating Preferred Stock then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.  In the event
there are not sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of Common Stock.

         (C)     In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, by
reclassification or otherwise, then in each such case the Adjustment Number in
effect immediately prior to such event shall be adjusted by multiplying such
Adjustment Number by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.





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         7.      Consolidation, Merger, etc.  In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged.  In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that are
outstanding immediately prior to such event.

         8.      Redemption.  The shares of Series A Participating Preferred
Stock shall not be redeemable.

         9.      Ranking.  The Series A Participating Preferred Stock shall
rank junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

         10.     Amendment.  The Certificate of Incorporation and the By-Laws
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Participating Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of at least 66-2/3% of the outstanding
shares of Series A Participating Preferred Stock voting separately as a class.

         11.     Fractional Shares.  Series A Participating Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Participating Preferred Stock.

         IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury as of the
____ day of May 1997.



                                       /s/ GARY J. JOHNSON
                                       -----------------------------------------
                                           Gary J. Johnson
                                           President and Chief Executive Officer


                                       Attest:


                                       /s/ RONALD T. YARA
                                       ---------------------------------------- 
                                           Ronald T. Yara
                                           Secretary