NEW YORK – Things could hardly turned out better for MIPS Technologies in the latest patent acquisition deal in which ARM and Imagination Technologies are carving up the company.
MIPS CEO Sandeep Vij insisted Tuesday (Nov. 6) after word of the deal broke that it was “done in the best interest of our industry partners, shareholders and employees.”
Indeed, the transaction “returns over three times the book value per share [of MIPS] and more than the current market capitalization value of $380 million,” said J. Scott Gardner, a senior analyst at The Linley Group. It appears that MIPS employees are OK for now since Imagination said it plans to retain most of its current MIPS workforce of about 160 employees.
The deal's price tag ($350 million from an ARM-led consortium and $60 million from Imagination) illustrates the value placed on MIPS' IP.and the fact that MIPS is also a winner in this deal.
Gardner said “the MIPS patents could have been used to extract license fees from most of the companies building CPUs.”
MIPS, a pioneer of 32- and 64-bit CPU architectures, “invented many of the key microprocessor concepts,” said Gardner. These were considered so essential that ARM led the group that was one of the keys to the acquisition, the Allied Security Trust, a consortium of companies with a history of buying up patents.
The most important element of the deal may be Imagination’s promise not to kill MIPS.
Many observers were undoubtedly worried about the future of the MIPS architecture. During a conference call, Imagination CEO Hossein Yassaie (left) stressed that Imagination will keep the MIPS architecture “going forward” while calling the growing CPU market “the fundamental business we need to get engaged in.”
Noting that Imagination currently has about 100 engineers on its CPU development team, Yassaie said “we will be almost doubling the team by adding MIPS engineers." Yassaie also reiterated his intention to raise the stakes in a CPU battle that is expected to be fought over connected devices.
The endgame is to merge the internal CPU development efforts at Imagination and MIPS. “There are significant similarities between our in-house CPU and that of MIPS,” Yassaie said.
Gardner, the analyst, said the new development effort means “the gloves coming off in its competition with ARM.” This could create near-term discomfort among industry players since ARM will still need to work closely with Imagination. Imagination also is Apple's GPU vendor.
The company's GPUs are also used by Intel, but Gardner doesn’t believe Intel has as much to fear from the Imagination-MIPS deal as ARM.
In the longer term, “Imagination is better off with MIPS in its portfolio of IP," he added. "Imagination’s ‘Meta’ CPU core would have required substantial time and investment” to be a serious alternative to ARM-base cores. “The combination of the two companies is ultimately stronger than either company could have been on its own."
We editors like to join and spark the online conversation in the "open source" world rather than do it privately. We get more crowd sourcing smarts from the engineering world that way.
Question for you, Tom: Does this deal significantly upset the balance of processor patents in the ARM vs. Intel camps?
Rick, don't you and Junko work at the same company? I see UBM editors writing to each other often in article comments. Maybe you could peer-review or read each others' stories before publishing them rather than asking the questions with the rest of the readers.
As for the topic of this article, the MIPS architecture has had very limited success outside of networking and is not in the broad spectrum of markets that ARM continues to seep into. Outside of networking, MIPS's primary value is in its patent portfolio. Indeed, that is something that both ARM and Imagination should be able to take advantage of in their own designs and/or monetize through licensing - a fundamental part of their businesses.
82 patents Imgaination is buying are strictly related to MIPS architecture, essential for Imagination to develop MIPS core further.
While 498 patents ARM-led consortium is buying is more on fundamental processing.
It's important to note that Imagination is granted with "royalty-free, perpetual licence" to all of the remaining 498 patents it did not purchase.