The arrangement includes a long-term licensing and IP development relationship between the two companies that would enable NXP to reduce costs, the companies said in joint statement.

Under the terms of the agreement Virage Logic will establish an R&D center in Eindhoven and provide support to NXP for the development of products based on the acquired advanced CMOS I/O, analog mixed signal and System-on-Chip (SoC) infrastructure IP.

At the same time NXP will transfer over 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 return NXP is set to receive 2.5 million shares of Virage Logic common stock.

Virage Logic will provide design services surrounding the transferred IP for a 3.5-year period, and NXP will receive a 3.5 year license to Virage Logic's standard-products semiconductor IP portfolio for all future SoC designs.

In consideration for the services and the license of the Virage Logic IP portfolio, NXP will pay Virage Logic $60 million over four years from the closing of the transaction. The deal is expected to close in the fourth quarter.

"Today's announcement represents the latest milestone in NXP's strategy of leadership and focus," said Rick Clemmer, president and CEO of NXP, in a statement issued by Virage. "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."

"Our internal IP development team is world class as evidenced by the first-time functional success we experienced with our 45-nanometer chips," said Rene Penning de Vries, chief technology officer of NXP, in the same statement. "We selected Virage Logic because we have been working with them for many years and their proven technology leadership as a broad line IP supplier made them our partner of choice to distribute NXP's IP globally as well as further the development of this advanced IP."

"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 Alex Shubat, president, CEO and co-founder of Virage Logic. "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."

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