Powertech Technology Inc (PTI, 力成), which provides packaging and testing services for memory chipmakers, yesterday said it had reached a deal to settle all patent claims with Tessera Inc, while terminating an existing license pact with the US company.
The Taiwanese company and its wholly owned subsidiary, Macrotech Technology Inc (聚成), have agreed to pay US$196 million over the next five years to the US firm in a bid to resolve their dispute over royalties and the license agreement, according to a press release issued after the local stock market’s close yesterday.
The scheme is not expected to financially burden the Hukou (湖口), Hsinchu County-based company, which had NT$72.65 billion (US$2.39 billion) in current assets, including NT$21.25 billion in cash and cash equivalents, at the end of September last year, according to its balance sheet.
In a filing to the Taiwan Stock Exchange, Powertech said it would book the US$196 million as a one-time charge in its fourth-quarter results.
That would cause the company to report losses per share of NT$7.45 for the final quarter of last year, compared with earnings per share (EPS) of NT$0.5 in the previous quarter.
Moreover, the charge would force the company to report its first annual loss in 13 years, with losses per share expected to be NT$5.24 for last year, down from EPS of NT$4.57 in the previous year. Originally, the company forecast its EPS for last year at NT$2.56.
“All disputes related to the past running royalties and raised in their ongoing litigation will be resolved and the underlying license agreement with Tessera will be terminated as of Dec. 31, 2012,” Powertech said in the press release.
The company said it believes it is in the best interests of its future development to settle the disputes, adding that the one-time charge spread over five years would not have a significant impact on its working capital.
Powertech spokesman Evan Tseng (曾炫章) said in the filing that early termination of the license contract is necessary, as the firm would not need to pay royalties to Tessera in the future.
Powertech shares rose 0.36 percent to close at NT$42.3 yesterday before the announcement of its settlement with Tessera.
Over the past six month, the company’s shares have declined 18.65 percent, compared with the broader market’s 10.47 percent increase over the same period, as the company — which focuses on semiconductor back-end processes, such as bumping, packaging and testing — faced intensified competition and sizeable losses of orders to its peers, analysts said.
According to analysts, that is because Japanese chipmaker Elpida Memory Inc used to be Powertech’s biggest customer, but Powertech lost most of Elpida’s testing orders in the second half of last year after the Japanese company was acquired by Micron Technology Inc.
Powertech is forecast to lose more order allocation from Elpida’s packaging business, given that Micron has an in-house testing plant in the Chinese city of Xian in Shaanxi Province, they said.
“Based on our channel checks, PTI has been making positive progress on its logic back-end business. However, we believe the earnings impact from its DRAM back-end business will be larger than the market expects for the larger part of 2014,” Yuanta Securities Corp (元大證券) analyst Andrew Chen (陳治宇) said in a note to clients yesterday.
Yuanta forecast the company would report EPS of NT$2.3 for this year, rather the NT$3.4 it predicted earlier.
Deutsche Bank also considers Powertech’s sales contribution from Micron — including Elpida — and Toshiba Corp to be likely to decline to 52 percent this year and 47 percent next year, from 59 percent last year.
“We forecast Powertech to lose more market share in Elpida’s packaging orders to ChipMos Technologies Ltd (南茂) and Advanced Semiconductor Engineering Inc (日月光) in 2014 and 2015,” Deutsche Bank analyst Michael Chou (周立中) said in a separate note.
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