OTTAWA, Ontario -- Mosaid Technologies Inc. here today announced a restructuring of its operations, partly because patent-licensing negotiations broke down with an unidentified major memory manufacturer. The company also announced other cost-cutting actions, including the end to its module test business.
Mosaid said it had hoped to sign a licensing pact with the memory maker, but the breakdown of negotiations, along with poor market conditions, has caused the Canadian company to decide to cut its workforce by 17%. The company, which believes it holds basic DRAM patents, plans to step up its efforts to enforce intellectual property rights.
"Up until two weeks ago, we believed that a major new patent licensing agreement would be signed in our second quarter which ends Oct. 26," said George Cwynar, president and CEO of Mosaid. "In the absence of this agreement, we can no longer sustain the same level of product and market development activities and must take measures to lower our cost base."
Two years ago, Mosaid launched a licensing effort to collect royalties from memory makers (see July 9, 1999, story). The company has inked pacts with NEC Corp., Toshiba Corp., and Fujitsu Ltd.
In addition to dealing with intellectual property issue, Mosaid said it has decided to stop development of its Crypt-IC encryption chip, which was being designed for security specialist Chrysalis-ITS of Ottawa. Last month, Chrysalis-ITS decided to shut down its semiconductor division (see Aug. 16 story).
Mosaid said it remains committed to its branded networking chip initiative and will focus R&D efforts to commercialize its classification and switching product families.
The company's Systems Division, which supplies test systems, will continue to serve memory markets with its general purpose MS4205, but Mosaid said it will exist the module test business.
As a result of actions, Mosaid said it expects to take a one-time restructuring charge of approximately $3.2 million, and post a loss from operations in the fiscal second quarter, ending Oct. 26.
Mosaid's Intellectual Property Division will now step up its efforts to enforce patents more aggressively. "MOSAID has played a pioneering role in the development of dynamic randomaccess memory (DRAM) products," Cwynar said. "Our patent portfolio reflects this, and we
have only begun to realize its value.
"We are determined not to sacrifice this value for short term revenue gains, and we will pursue our objectives by addressing the matter of patent infringement through litigation, if necessary," he warned.