At the agreement's core is the transfer of a part of Netherlands-based NXP’s CMOS IP rights and certain engineering talent and equipment to Fremont, Calif-based Virage, a move that is expected to significantly reduce costs at NXP as the company continues its efforts to focus on high-performance mixed signal. Indeed, today's announcement is the latest in a string of refocusing moves made by NXP. Just last week announced plans to transfer its digital TV and set-top box lines to Trident, taking a majority stake in the company, so that it could better focus on high-performance mixed signal.

As part of today's announced deal, Virage Logic will establish an R&D center in Eindhoven providing on-going support to NXP and developing new products based on the acquired advanced CMOS I/O, analog mixed-signal, and SOC infrastructure IP. Virage estimated the new products will be commercially available in early 2011.

Under the terms of the multi-year agreement, NXP will transfer more than 160 employees and the assets associated with selected advanced CMOS libraries, IP blocks, and SOC architecture, along with other classes of semiconductor IP, including approximately 25 associated patent families.

In turn, NXP will receive 2.5 million shares of Virage common stock, which will be subject to transfer restrictions, and an unspecified share of the future revenue generated by Virage from licensing the transferred IP portfolio. In addition, Virage will provide to NXP services surrounding the transferred IP for a three and a half year period, and NXP will receive a three and a half year license to Virage's standard-products semiconductor IP portfolio for all future SOC designs. NXP will pay Virage $60 million over four years from the closing of the transaction for the services and licenses.

“NXP’s decision to select Virage Logic as its trusted IP provider allows the company to focus on its strategic vision to achieve leadership in high performance mixed signal," said Rick Clemmer, president and CEO of NXP, in a statement. "The partnership with Virage Logic will also guarantee the availability of state-of-the-art of IP to NXP and provides NXP the opportunity to participate in the value creation through our equity ownership and license sharing agreement with Virage Logic.”

“Virage Logic was founded on the vision that an independent IP company could provide the technically superior building blocks the global semiconductor industry needs to develop their highly differentiated end products more cost effectively and deliver them to market more quickly,” said Dr Alex Shubat, president, CEO and co-founder of Virage, in the statement. “Our partnership with NXP validates our vision and we are excited to have the talented NXP technologists join Virage Logic’s global R&D team to further the development of NXP’s IP technology. The Eindhoven R&D center of excellence will drive the productization of NXP’s advanced CMOS IP technology and will enable Virage Logic to make this leading technology available to global SOC designers as they build products to meet their end market requirements as well as to service NXP’s IP needs for their next generation products.”

The companies are targeting a Q4 closing of the transaction, which is expected to be accretive in Virage's fiscal Q4 2010.

By: DocMemory
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