MIPS Technologies

Imagination Buys MIPS – After Patent Sale to ARM

November 6, 2012 - Written By Kody Frazier

Imagination Technologies Group Plc has agreed to purchase chip designer MIPS Technologies Inc for $60 million in cash. MIPS, a semi-conductor designer based in California, has also gone by MIPS Computer Systems in the past. Following the announcement, Imagination rose 0.2-percent to $465.90 in London trading, though the English company made little headway against their 15-percent loss in value so far this year.

If you’re familiar with ARM technology, you may have expected a greater rise in stock purchases following the news of the buyout. MIPS held several patent designs that the ARM development group was very interested in acquiring. ARM technology is the backbone of the mobile technology industry, and while challengers such as Intel are ready to break into the market, but the trend is still heavily in the favor of ARM designed processors for the next generation of devices. In fact there are multiple rumors that Apple is planning on replacing the Intel chips in their next generation of devices with ARM processors.

So why, with all of this build-up for more ARM adoption would the purchase of MIPS have been so uneventful for the marketplace? Because prior to the purchase, MIPS sold 580 patents to the ARM development group, effectively neutering the majority of its exclusivity potential, for $350 million. Reportedly, MIPS hired Goldman Sachs Group Inc to find a buyer for the business as far back as April. Imagination will still have royalty free, perpetual access to these patents as part of the buyout.

Imagination was very upbeat about the purchase, and in a statement their CEO Hossein Yassaie said:

“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.”

For the $60 million price tag, Imagination will get a team of 160 MIPS engineers and an exclusive patent portfolio of 82 designs. MIPS has not made any major pushes into the mobile technology industry, prefering instead to focus on home electronics such as routers, televisions, and gaming consoles. However, with Imagination at the helm, MIPS technology is expected to begin pushing into mobile development.

Source: BusinessWeek