EINDHOVEN, Netherlands & FREMONT, Calif., Oct 12, 2009 (BUSINESS WIRE) -- NXP Semiconductors and Virage Logic Corporation (NASDAQ:VIRL) today announced a strategic agreement that accelerates NXP's move to high performance mixed signal leadership and further broadens Virage Logic's extensive semiconductor IP portfolio. The agreement calls for the transfer of a part of NXP's advanced CMOS intellectual property rights and certain engineering talent and equipment to Virage Logic. This arrangement includes a long-term licensing and IP development relationship between the two companies, enabling NXP to significantly reduce costs without compromising its design capability. Virage Logic will establish an R&D center in Eindhoven providing on-going support to NXP and developing new products based on the acquired advanced CMOS I/O, analog mixed signal and System-on-Chip (SoC) infrastructure IP. These new products, expected to be commercially available in early 2011, further the company's leadership position as the largest independent IP provider to the semiconductor industry.
This strategic alliance underscores the semiconductor industry's continuing trend for companies to focus on their core competencies while outsourcing non-differentiating elements of their business. This trend has enabled semiconductor companies to increase design concentration on development of their unique technical advantages, thus improving both product development cycle time as well as increasing the breadth of new product features. NXP's decision to select Virage Logic as its trusted IP provider is another step in the company's strategic vision to achieve leadership in high performance mixed signal.
Under the terms of the multi-year agreement, 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 consideration for the assets, NXP will receive 2.5 million shares of Virage Logic common stock, which will be subject to transfer restrictions, and a share of the future revenue generated by Virage Logic from licensing the transferred IP portfolio. In addition, Virage Logic will provide to NXP services surrounding the transferred IP for a 3.5-year period, and NXP will receive a 3.5 year license to Virage Logic's extensive 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 companies are targeting a closing in Q4 of this year, pending consultations with employee representatives. The transaction is expected to be accretive in Virage Logic's fourth fiscal quarter of 2010.