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ARM Holdings licenses big chunk of MIPS patents

Game over for MIPS ... or, just maybe, not

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Updated ARM Holdings has helped form a consortium that has bought the rights to the majority of the patent portfolio of rival RISC chip biz MIPS Technologies. MIPS could have been a contender for clients and servers but almost certainly won't be now.

MIPS chips have a minimalist, low-power design much like the various ARM processors do and have been popular inside of routers and other embedded devices.

But ARM, which is trying to harness the enthusiasm behind its own RISC architecture and turn it into a very big pile of money, is clearly on the rise and MIPS, not so much. Given the litigious nature of tech companies these days and sour grapes in general, it is far better for ARM to buy access to the patents than to try to fight a legal battle on one front with MIPS while fighting a tech battle with Intel on the other front.

The deal is a bit complex. American firm Allied Security Trust, which likes to buy up and license high tech patents,has created company called Bridge Crossing LLC. This Bridge Crossing partnership is shelling out $7.31 per share, or around $350m, in cash to each holder of MIPS stock to acquire 498 of the 580 patents that MIPS holds.

MIPS is retaining the other 82 patents, which relate directly to the MIPS processor architecture, and once the majority of the patent portfolio is transferred to Bridge Crossing, Imagination Technologies Group, the British developer and acquirer of technology relating to graphics, video, on-chip communications, and multi-core processing, is working will take over the remaining operating business of MIPS, which generates something on the order of $14m a quarter these days, giving it access to those 82 patents and the right to license them. Imagination is spending $60m to buy the remains of MIPS. Imagination says that MIPS will have to hold back $100m of the proceeds from the sales to cover taxes and other liabilities.

The combined $410m, say Imagination and AST, represents a 40 per cent premium of the value of MIPS before rumors of a possible sale of the chip maker and technology licenser hit the wires back in April.

ARM, as it turns out, is a leading investor in Bridge Crossing – any relation to Sandy Bridge or Ivy Bridge is absolutely coincidental, El Reg is sure – and is shelling out $167.5m of the $350m that Bridge Crossing is using to buy those 498 patents.

"ARM is a leading participant in this consortium which presents an opportunity for companies to neutralize any potential infringement risk from these patents in the further development of advanced embedded technology," explained Warren East, CEO at ARM, in a statement. "Litigation is expensive and time-consuming and, in this case, a collective approach with other major industry players was the best way to remove that risk."

It is not yet clear who the other investors might be in Bridge Crossing. Ironically, Intel has historically been a big investor in Imagination, and had amassed a 16 per cent stake in the company in 2009. It is not clear what Intel's current stake in Imagination will be after this deal closes, or if it will buy access to the Bridge Crossing patents. Bridge Crossing has put the $350m in cash in an escrow account and MIPS expects for the transaction to close sometime in the first quarter of 2013, once regulators and MIPS shareholders approve the deal.

So at first glance, it looks like game over for MIPS in the race to be one of the dominant processor architectures, despite the very solid engineering that the Silicon Graphics and MIPS Technologies have done over the years. But now Imagination has graphics, communications, and processing technologies and plenty of expertise in system-on-chip designs through MIPS. It seems unlikely, but this could be a way to do a better job of taking on ARM using ARM's own money against it. The odds are low, but 15 years ago, so were the odds for ARM. You just never know in this crazy IT racket. ®

Update

This story originally reported that Imagination and AST were teaming to create Bridge Crossing. Imagination, however, is only buying MIPS, and the remaining patents AST will control through its stake in Bridge Crossing.

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