Imagination buys US computing pioneer MIPS

UK chip designer Imagination Technologies is to acquire US computing pioneer MIPS Technologies in a deal which will unite two of the world's top five semiconductor design intellectual property (IP) firms.Imagination is paying $60m to get its hands on the US firm and 82 of its patents, although in a separate deal a consortium of industry players, led by chip designer ARM, will acquire a large chunk of the MIPS patent portfolio, including 580 patents and patent applications covering microprocessor design, system-on-chip design and other related technology fields. While gaining control of 82 patents that are directly relevant to the MIPS architecture, Imagination will also have comprehensive licence rights to all of the remaining 498 MIPS' patent properties which are being sold to the consortium, Bridge Crossing LLC.Bridge Crossing comprises major technology companies affiliated with Allied Security Trust, the member-based patent holding company, and will pay $350m in cash to acquire rights to the portfolio, of which ARM will contribute $167.5m. "ARM is a leading participant in this consortium which presents an opportunity for companies to neutralise any potential infringement risk from these patents in the further development of advanced embedded technology," said Warren East, Chief Executive Officer of ARM. "Litigation is expensive and time-consuming and, in this case, a collective approach with other major industry players was the best way to remove that risk," East added.Meanwhile, Hossein Yassaie, Chief Executive Officer of Imagination, sounded stoked to get his hands on the wheel of the company that pioneered the reduced instruction set computing (RISC) central processing unit (CPU) architecture."I believe that the combination of our existing Meta CPU technologies and activities with MIPS's capabilities will help us to create a new force to be reckoned with in the CPU intellectual property market," Yassaie said.The acquisition of MIPS adds highly respected RISC-based 32-bit and 64-bit CPU applications processor architectures that complement Imagination's existing Meta 32-bit embedded CPU IP product family, Imagination said. The architectures have similar philosophies in several key areas including hardware multi-threading while also bringing highly complementary capabilities. MIPS's major customers are global semiconductor companies and system original equipment manufacturers. MIPS's customers pay it licence fees for the use of MIPS's architectural, product and intellectual property rights, as well as royalties based on processor unit shipments.In the 12 months to June 30th 2012 MIPS had 56 royalty-paying licensees, and the licensing business generated some $60.0m in revenue and a loss before tax of around $9.0m. MIPS's licensing business had gross assets of about $20m at the end of September.The acquisition of the loss-making business is likely to slightly dilute Imagination's earnings per share (EPS) in the 2013 financial year, but - leaving aside one-off items - should provide a boost to EPS from 2014 onwards.