Mosaid Technologies Inc. last week said it will restructure its operations, partly because patent-licensing negotiations broke down with an unidentified major memory manufacturer. It 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, caused the Ottawa-based design firm to cut its workforce by 17%.
Two years ago, Mosaid launched a licensing effort to collect royalties from memory makers and signed pacts with Fujitsu Ltd., NEC Corp., and Toshiba Corp. The company, which believes it holds basic DRAM patents, plans to step up its efforts to enforce intellectual property rights through its Intellectual Property Division.
"Mosaid has played a pioneering role in the development of [DRAM] products," said George Cwynar, president and chief executive. "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. 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," Cwynar warned.
In addition to dealing with the IP 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.
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 exit the module test business.
As a result of the actions, Mosaid said it expects to take a one-time restructuring charge of approximately $3.2 million, and post a loss from operations in its fiscal second quarter.
Robert Lineback is editor-in-chief of Semiconductor Business News, a sister publication of EBN.