Tessera gains camera module manufacturing assets through Flextronics deal

March 2, 2012 – BUSINESS WIRE — Tessera Technologies Inc. (NASDAQ:TSRA), through its wholly owned subsidiary, DigitalOptics Corporation (DOC) will acquire certain assets of Vista Point Technologies, a Tier-One-qualified camera module manufacturing business of Flextronics International Ltd. (NASDAQ:FLEX). DOC anticipates that the business will have a capacity to manufacture approximately 50 million camera module units per year.

DOC will pay approximately $23 million in cash for the assets from Flextronics’s camera module business in Zhuhai, China, along with the equity interests of a wholly owned foreign enterprise that will own those assets, together called the Zhuhai Camera Module Business. It includes existing customer contracts and a lease to an approximately 135,000-sq.ft. facility.

Tessera’s strategy is to transform DOC from an optical and image enhancement software and components business into a Tier-One qualified, vertically integrated supplier of next-generation camera modules, said Young. Tessera estimates the market for mobile cameras at about $9 billion. Tessera is also involved with multiple Tier-One mobile phone OEMs regarding its micro electro mechanical system (MEMS) autofocus product, expecting a design win in H1 2012 and a volume manufacturing ramp in Q4. "Our goal is for DOC to become profitable in 2013," said Young.

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The Zhuhai Camera Module Business will enhance DOC’s existing collaborations with camera module makers by driving rapid market introduction of next-generation technology, said Robert A. Young, president and chief executive officer, Tessera Technologies, Inc., adding that Tier One OEM manufacturers require that camera modules be delivered through dual sourcing from high-volume manufacturing facilities. The Zhuhai Camera Module Business offers a world-class, cost-competitive, high-volume facility and a well-trained team of engineers and manufacturing employees. DOC plans to increase sales of its imaging technologies via the new assets, combining its MEMS autofocus and other proprietary technologies in integrated camera modules for mobile phones, said Bob Roohparvar, president of DigitalOptics Corporation.

DOC has been developing its capacity of oversee high-volume manufacturing operations alongside its technological development in optical imaging. DOC has hired more than a dozen executives and managers with engineering scale-up expertise and volume manufacturing experience.

Under the agreement, DOC will reimburse Flextronics for certain transaction expenses, taxes and inventory, the amounts of which will be determined at closing. The transaction also includes an intellectual property assignment and license agreement, and a transition services agreement. DOC intends to offer employment to a portion of the existing work force of the Flextronics camera module business in Zhuhai, China. The transaction is expected to close by the end of the third quarter. It is subject to various closing conditions, including necessary approvals from the appropriate PRC governmental authorities.

Tessera’s financial advisor on the transaction was GCA Savvian Advisors LLC, and its legal advisor was Latham & Watkins LLP.

Tessera Technologies, Inc. is a holding company with operating subsidiaries in two segments: Intellectual Property and DigitalOptics. Our Intellectual Property business generates revenue from patented innovations through license agreements with semiconductor companies and outsourced semiconductor assembly and test companies. Tessera, Inc. pioneered chip-scale packaging solutions for the semiconductor industry. Our DigitalOptics business delivers innovation in imaging and optics with products and capabilities that enable expanded functionality in increasingly smaller devices. Our miniaturized camera module solutions provide cost-effective, high-quality camera features, including micro electro mechanical systems (MEMS)-based autofocus, extended depth of field (EDoF), zoom, image enhancement and optical image stabilization. We also offer customized micro-optic lenses from diffractive and refractive optical elements to integrated micro-optical subassemblies. For information, go to www.tessera.com.

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