Chip technology developer
Tessera Technologies Inc.
) recently announced that its subsidiaries Tessera, Inc. and
Invensas Corporation each signed a patent licensing agreement
with SK hynix Inc. for an undisclosed sum. Per the terms of the
agreement, SK hynix can use Tessera Inc. and Invensas Corporation
patent portfolios for eight years.
Though the companies did not disclose the specific financial
terms, Tessera will receive a one-time payment and running
royalty payments. This deal will increase recurring royalty
revenues for Tessera beginning from the second quarter, as the
company reports royalties one quarter in arrears. Apart from this
deal, Tessera and SK hynix have also agreed to dismiss the
antitrust lawsuit pending in a California state court.
SK hynix Inc. is a South Korean memory semiconductor supplier
of dynamic random access memory (DRAM) chips and flash memory
chips. It is the world's second-largest memory chipmaker after
Samsung Electronics and the world's sixth-largest semiconductor
We believe that the association with SK hynix Inc. will
support Tessera's fundamentals for the upcoming quarters. Such
deals will increase recurring royalties for the company, giving
it more financial strength to invest in attractive growth
opportunities through the economic cycle.
Tessera is a provider of backend technology for semiconductor
manufacturing. It operates in two segments, Intellectual Property
and DigitalOptics. The Intellectual Property (IP) business
generates revenue from manufacturers that use its patented ideas,
while DigitalOptics' miniaturized camera module solutions provide
cost-effective and high-quality camera features.
The company posted decent third quarter results, with earnings
of 5 cents beating the Zacks Consensus Estimate by 3 cents.
Revenues of $72.7 million jumped both sequentially as well as
from the year-ago quarter. Tessera has a strong balance sheet,
with $465.9 million in cash and short-term investments and no
Currently, Tessera has a Zacks #3 Rank (Hold). Its rival
Amkor Technology, Inc.
) carries a Zacks #3 Rank (Hold), while
Advanced Semiconductor Engineering Inc.
) carries a Zacks #2 Rank (Buy).
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