Tessera Technologies Inc. (TSRA), the licensing company run by CEO Thomas Lacey, said it acquired Ziptronix Inc., a privately-held, venture-backed spinoff of RTI International and developer of low-temperature direct bonding technology for 3D integration, for $39 million in cash.
San Jose, Calif.-based Tessera said the acquisition expands on its existing advanced packaging capabilities by adding a low-temperature wafer bonding technology platform that will accelerate delivery of 2.5D and 3D-IC solutions to semiconductor industry customers.
Tessera said Ziptronix's patented ZiBond direct bonding and DBI hybrid bonding technologies deliver scalable, low total cost-of-ownership manufacturing solutions for 3D stacking.
Moreover, Ziptronix’s intellectual property has been licensed to Sony Corp. for volume production of CMOS image sensors - an estimated $8.3 billion market according to Gartner.
Tessera said Ziptronix's technology is also relevant to next-generation stacked memory, 2.5D field programmable gate arrays or FPGAs, RF Front-End and MEMS devices, among other semiconductor applications. Inclusive of complementary metal-oxide semiconductor or CMOS image sensors, Tessera expects the annual market size to which this technology applies to exceed $15 billion by 2019.
"The acquisition shores up Tessera’s existing pool of IP and patents relating to 2.5D and 3D IC packaging technologies," said Gary Mobley, an analyst at The Benchmark Company, who rates Tessera a "buy" and has a price target of $45, in a note to investors.
"In the near term (e.g. 2H FY15) we expect the acquisition to have very little impact to revenue (due to accounting
treatment of existing license agreement), expenses (Ziptronix has fewer than 10 employees) and/or lost interest income (purchase price can come from 2H FY15 cash flow alone; TSRA has $432M in cash)."
Mobley said Ziptronix’ 3D-IC packaging IP is most applicable to CMOS image sensor wafer-level packaging.
"The company’s ZiBond hybrid bonding IP is new to the industry, and thus far, Sony is the primary licensee."
Mobley said Sony is the market share leader in the $8.3 billion image sensor market as Sony
dominates the market for image sensors used in high-end smartphones.
"Because of purchase accounting treatment and the nature of the Sony agreement, Tessera will rely on new license deals with Sony’s competitors (e.g. OmniVision) to drive FY16 revenue," he said.
Mobley said ZiBond is also applicable to FPGAs using 2.5D and 3D IC packaging, which is expected to bring the technology’s share of the market to $15 billion by 2019.
"The acquisition of Ziptronix is consistent with management’s desire to bolster next-gen packaging IP (e.g. BVA, 3D-IC and xFD) with the Invensas division and use a small portion of cash to fulfill this strategy (most cash flow is distributed to shareholders via dividends and share buyback)."
In addition, Mobley 3D-IC, which many see as the future of chip packaging, represents a platform technology and not a single-market technology.
"This next gen packaging technology is a key focal point for Invensas (and Tessera) R&D activity. The technology consumes the greatest amounts of R&D resources today. Because 3D-IC includes interconnects directly through the silicon, the technology requires a different manufacturing infrastructure before wide-scale market adoption."
Mobley added that Tessera has more thna 600 patents relating to 3D-IC technology.
“With this acquisition we're gaining best-in-class technology, along with exceptional people, know-how in the 3D-IC market and a significant patent portfolio,” Lacey said in a statement. “With the escalating cost for each node of semiconductor lithography, it remains very clear to us that our R&D spend on semiconductor packaging will only become more important and valuable to our customers.
Lacey noted that Ziptronix has licensed the ZiBond and DBI technologies and they stack up very well alongside Tessera’s extensive portfolio of 2.5D and 3D intellectual property.
“I'm confident that aligning our respective capabilities with our development expertise will help create a multi-hundred million dollar revenue opportunity for Tessera over the next decade as the industry continues to shift toward 3D-IC architectures."
"ZiBond and DBI bonding are enabling technologies that provide significant cost and performance benefits," said Craig Mitchell, President of Invensas, a Tessera subsidiary. "There is a great opportunity to further develop these platforms with our technology partners, and we're very excited about their market potential."
Ziptronix was founded in 2000 and is headquartered in Raleigh, North Carolina.
Dan Donabedian, CEO of Ziptronix added, "We've taken our technology from concept to commercialization in the backside illuminated image sensor and RF markets. Joining the Tessera family of companies combines our efforts with a proven leader in technology development and licensing in the semiconductor industry. This is a great alignment of companies that can address rapidly expanding 2.5D and 3D-IC markets."
Tessera said the addition of the Ziptronix team will not change Tessera's target operating expense structure, so the company is making no adjustments to third quarter 2015 revenue or earnings per share guidance.
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