Chip designer MIPS acquired for $60m; patents sold for $350m

U.S. chip designer MIPS will be acquired by U.K.-based communication technologies maker Imagination Tech. for $60 million in cash, securing the microprocessor's future as a competitor to British-designed ARM chips.  

MIPS also said today it has entered into a separate agreement with AST, a technology patent collective that sells technology rights to interested parties -- such as HP, Motorola, Intel, and IBM, who are all AST members -- to sell 498 patents of its total 580 patent assets for gross proceeds of $350 million. 

Imagination, through the MIPS buyout, will retain the remaining 82 patents that remain crucial to the MIPS architecture, while it enjoys a royalty-free, perpetual license under all of the patent properties sold to AST. 

Imagination will receive 160 engineers as part of the deal, ensuring the continued success of the architecture.

After being unanimously approved by the MIPS board of directors, the company's shareholders must now approve the two transactions.

MIPS chief executive Sandeep Vij said in prepared remarks:

By combining the technologies and skills of MIPS and Imagination, a leading multimedia, communications and embedded processor technology company, we believe that we can together create a powerful, well-differentiated and highly influential alternative to existing CPUs in the market. The move is highly strategic and presents clear benefits to MIPS' customers, employees, and partners.

Sunnyvale, CA.-based MIPS, which designs processor architectures and cores for networking, mobile devices and home entertainment, powers more than 700 million units, the company said. The firm licenses its designs to other companies for development. MIPS remains one of the few architectures that supports Android, currently leading the global smartphone platform market share.

Imagination creates and licenses processors designed for a multitude of tasks, including graphics, video, display processing and connectivity. With a U.K. base, the firm has research and development facilities around the world.

Imagination chief executive Hossein Yassaie also commented:

We have been working closely with MIPS for several years now and have a number of mutual customers and partners. I believe that this transaction will be welcomed by both companies'; customers and the electronics industry at large.

The deal is expected to close by the end of the first quarter next year.