Tessera aims to wrap up IPO
Published: 30 Oct 2003 15:45 GMT
It's been a long haul, but Tessera Technologies is angling to make a large market out of small packages.
The company -- which is expected to hold its initial public offering (IPO) in about two weeks -- specialises in designing semiconductor packaging, the sleeves that wrap around processors or memory chips and connect the chips to the motherboard.
Although historically a backwater of the chip world, packaging is taking on increased importance as cell phones and other devices get smaller but more powerful. Packaging is a $7bn industry, but it will grow to $12bn in 2007, a faster growth rate than that of the chip industry as a whole, according to Semico Research.
"The importance of packaging has grown over the last 10 years because as chips have gotten faster, issues on how to get signals out of the chip have grown," said Nathan Brookwood, an analyst at Insight 64. "It is a nontrivial problem. You've got materials issues, thermal issues, manufacturing issues."
Tessera holds some of the more valuable recipes in the packaging cookbook. Intel, for instance, licensed the company's multi-chip packaging technology for, among other products, an upcoming flash memory module that will let phone makers stack up to four chips vertically in the same space where one chip fits now.
Drawing on statistics from Tessera, market research company Gartner says the market for chip scale packaging, the basic package Tessera invented, should grow from 4.4 billion units in 2002 to 18.9 billion units in 2006, representing a compound annual growth rate of 44 percent. Two and a half billion semiconductors with the packaging have already been made. While other companies will manufacture packages, Tessera will potentially be able to receive royalties on all the units shipped.
Texas Instruments, Sharp and others have also paid millions to settle legal disputes with Tessera, according to filings with the Securities and Exchange Commission.
A year from now, the company will square off against Samsung Electronics in an intellectual-property lawsuit in the US District Court for the Northern District of California.
Tessera alleges that Samsung has infringed its patents. Samsung, which has been a Tessera licensee, denies the allegation and adds that Tessera fraudulently obtained its patents by failing to disclose its intellectual property while a member of the Joint Electron Device Engineering Council.
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