NXP and Virage Logic Strategic Alliance on semiconductor IP portfolio

NXP and Virage Logic Strategic Alliance Accelerates NXP’s Move to High Performance Mixed Signal Leadership and Further Establishes Virage Logic as an IP Power House

Agreement Transfers NXP’s Advanced CMOS Semiconductor Horizontal IP Technology and Development Team to Virage Logic for Broad Market Availability and Establishes Virage Logic as NXP’s Trusted IP Provider

NXP Semiconductors and Virage Logic Corporation 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.

"Today’s announcement represents the latest milestone in NXP’s strategy
of leadership and focus," said Rick Clemmer, president and CEO of NXP
Semiconductors. "NXP’s decision to select Virage Logic as its trusted IP
provider allows the company to focus on its strategic vision to achieve
leadership in high performance mixed signal. 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."

Dan McCranie, executive chairman for Virage Logic, said, "Over two years
ago, we embarked on a transformation that was based on several key
strategic initiatives. Amongst those initiatives were, a) the broadening
of our IP product portfolio through both organic and inorganic growth
and, b), establishing Virage Logic as the semiconductor industry’s
Trusted IP partner. Today’s announcement with NXP represents strong
progress on both of those initiatives. All of us at Virage Logic are
proud of the confidence that NXP has shown in our technical teams to be
selected as the IP provider to NXP for their future development. In
addition, we are excited about the future ability to expand our IP
offerings to the semiconductor industry through the productizing of
NXP’s important IP elements."

"This partnership enables us to serve customer demands and boost
flexibility in the timely supply of cost effective and innovative ICs
for a multitude of applications," said René Penning de Vries, chief
technology officer (CTO) of NXP Semiconductors. "Our internal IP
development team is world class as evidenced by the first-time
functional success we experienced with our 45-nanometer chips. 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 Dr. 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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