Wednesday, March 26, 2014

Tessera to License MEMS AF Patents to O-Film

Business Wire: Tessera signes a non-binding letter of intent (LOI) with Shenzhen, China O-Film Tech Co. for the sale of certain patents and equipment assets related to Tessera’s wholly-owned subsidiary DigitalOptics Corporation (“DOC”). In addition, the LOI contemplates a patent license agreement related to MEMS and camera module technology, as well as a license agreement related to certain software features of Tessera’s FotoNation business. The LOI also contemplates that O-Film will assume or sublease DigitalOptics’ facility lease in Arcadia, California. Additionally, both Tessera and O-Film are working towards establishing a long-term collaborative relationship between the two companies.

"This transaction with O-Film will enable us to continue to focus on our core competencies in IP licensing and imaging and we are pleased to have identified such a high-quality partner as O-Film for these valuable imaging assets," said Thomas Lacey, Tessera CEO. "O-Film is a leading developer of optical components and digital cameras in China. We are hopeful that a final agreement can be reached, and look forward to working with O-Film in the future."

The total consideration for this transaction is $50M. O-Film made an initial deposit of $5M in connection with the signing of the LOI, which will be credited towards the total consideration. The balance of $45M is to be paid upon closing of the transaction. O-Film will pay the purchase price with its cash at hand.

Thanks to SF for forwarding me the news!

8 comments:

  1. Normally I would make a snide comment about Chinese companies acquiring technology since they can't invent it themselves, but in this case I will make a snide comment about Chinese companies buying a "pig in a poke".

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  2. You ought to stifle yourself from making snide and rude comments. My understanding is that the MEMS AF has scored at least one design win for a Chinese handset maker (just prior to the shut down), perhaps more. So, I am not sure what you mean by a pig in a poke here. Second, the valuation probably barely recovers the investment made by Tessera in this (formerly Siimpel) technology, but it is probably a realistic valuation. Third, I expect the technology to be pulled from Arcadia and transferred to China before long. This does bother me and it reflects the general sentiment of the American financial community to maximize profit at the expense of American jobs and future vitality of the nation. But, we are powerless to impact this.
    Meanwhile, you had best brace yourself for a wave of true Chinese innovation over the next few decades. If you can't see that coming, you are really blind. I just hope the US wakes up before we have a re-do of US v. Japan from the 1980s.

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    1. What happens to contract if technology as taken to another manuf. in China?

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  3. I am quite familiar with the TSRA technology - and my "pig in a poke" comment is that while "cool" the main problems that there is not a compelling differentiating feature with this technology (for the consumer market) when compared to VCM. In other words, the higher marginal price of the MEMS actuator is not worth the trade off in value. Meanwhile VCM and derivatives continue to lower their price and work advancements in size and speed (power will always be better in MEMS, but it's not like cellphone companies are looking at paying more for the AF as the way to wring out marginally more power).

    As for new consumer tech out of China, that isn't going to happen. There is no IP protection for innovation, no structure to reward innovators. If you are a young Chinese engineer and have a new idea you telling me you can get a start-up company going in China? Maybe - if you're related to the local Party Boss. If not, then it isn't going to happen. The best China can do is steal, acquire or knock off others.

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    1. Your comments about MEMS v. VCM AF are of course all valid discussion points. The VCM technology has improved a lot since 2005 so the incremental performance advantage of MEMS v. ASP has just hovered near the compelling tipover point but not quite. The biggest problem I had at Siimpel was explaining to the engineering brains that what we needed was something for today, not tomorrow. It was a struggle, and then the implosion of Motorola nearly took out Siimpel as collateral damage since Moto was the alpha customer and Siimpel had multiple design-ins for next gen Razor...back in the day. Too bad. Most did not see the Apple iPhone as the beast it became.

      Everything you just said about China is what was said about Japan in the 1960's. Then Taiwan, and then Korea up until the present, more or less. I am certain you will eat your shoe, eventually.

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  4. Mems approach has advantages as it comes to photogrammetric/computational imaging as the lens back focal length and tilt position is much more stable.

    Do you have a benchmark review on their chinese design win performance?

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  5. "license agreement related to certain software features of Tessera’s FotoNation business". This was a $30M M & A to Tessera years ago and is the preiminant facial recognition used in all Nikon, Canon, Olympus, Samsung DSC, MSLC and DSLRs, and several smartphone brands. I'm wondering if O-Film acquired this ongoing licensing revenue stream derived from Japan Inc. camera OEMs?

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  6. I had a peek at the roadmap and MEMS will blow VCM out of the water by the time VCM matches MEMS. Price will come down for sure. MEMS is the future.

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