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  • Tessera Pens Chip Agreements
Aug 2006
SAN JOSE, Calif., Aug. 15, 2006 -- Tessera Technologies Inc., a San Jose, Calif., provider of miniaturization technologies, and Micron Technology Inc. recently announced a technology license agreement under which Micron will pay $30 million in cash for a royalty-bearing license to Tessera's compliant chip (TCC) technology. The agreement gives Micron access to Tessera's patented semiconductor packaging technology.

Tessera will receive the payment in the third quarter of 2006. It covers full payment of past royalties through June 30, 2006, on the use of the TCC technology. The agreement also settles outstanding litigation between the companies, Tessera said.

Tessera reported it is raising full-year revenue guidance from $140 million to $142 million, which includes the impact of its acquisition of Digital Optics in July and assumes no new agreements for the balance of 2006. It said the full-year operating expense guidance includes litigation spending of $25 million to $26 million. The increase in litigation expense guidance of approximately $10 million primarily relates to the settlement of the Micron dispute and will be accrued in the second quarter, it said.

Tessara also announced definitive agreements with Infineon Technologies AG and Qimonda AG, an Infineon subsidiary, settling outstanding litigation and requiring future royalty payments. Infineon and Qimonda together will pay Tessera a total of $50 million in cash plus future royalties for licenses to Tessera's TCC technology and access to Tessera its patented semiconductor packaging technology.

Tessera Technologies, through its subsidiaries Tessera Inc. and Tessera Israel, provides miniaturization technologies for the electronics industry, including customers such as Intel, Samsung, Renesas, Toshiba and Texas Instruments.

With the signing of Micron Technology, Infineon and Qimonda, Tessera is now being paid royalties for the use of its chip scale packaging technology by licensees representing more than 80 percent of the DRAM market in 2005, according to Gartner Dataquest, said Bruce McWilliams, Tessera's chairman, president and CEO.

"These settlements were key steps toward our long-term goal of collecting royalties on more than 80 percent of all packages shipped using our chip scale and multichip packaging technology. We believe this goal will roughly translate to being paid on 11 billion units in 2008, versus 2.9 billion units in 2005," McWilliams said.

Mike Forman, Tessera's interim chief financial officer, said Tessera's full-year outlook and long-term growth has been significantly strengthened by the Micron and Infineon transactions. The combined settlements will result in approximately $76 million, classified as past production payments, in the third quarter, he said.

"Royalty payments for the third quarter shipments for both Micron and Infineon will begin in the fourth quarter, as we recognize royalty revenue one quarter in arrears," he said. "We expect Micron and Infineon will be significant royalty-paying customers for years to come. We now anticipate royalties for 2006 will grow as much as 70 percent over 2005, even if no further settlements or new licensing agreements are reached during the remainder of this year."

Tessera, which entered the field of consumer optics with its acquisition of Digital Optics, said it intends to introduce a wide variety of technologies that enable smaller and lower-cost camera phones, next-generation DVD drives and other optical products. It said it has also broadened its Shellcase portfolio with the introduction of the Shellcase CF technology platform, which allows it to target high-volume image sensors for camera phones.

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