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Apr 6th, 2013
Tessera cuts losses, shuts China fab
DigitalOptics subsidiary to stop making lenses for camera modules and focus efforts on MEMS technology development.
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Tessera Technologies’ DigitalOptics Corporation (DOC) subsidiary is to stop making camera modules, and close down its Chinese facility where the devices are produced.

The decision follows a review of the company’s business strategy by its independent directors, and comes just a year after Tessera acquired the Zhuhai site that it now plans to close from Flextronics in a $23 million deal.

In another apparent strategic reversal, DOC will now focus more of its efforts on the development of intellectual property, and in particular MEMS-based technologies. In 2010, Tessera had reorganized the business after what it described as the failure of its licensing strategy in wafer-level optics to deliver sufficient financial results.

The latest moves are expected to cut DOC’s capital spending by around half in 2013, to between $5 million and $7 million – although the strategic changes will initially cost the company around $20 million in restructuring and impaired asset charges.

Our board is taking action to deliver value for our stockholders in both the near and long term,” said independent director Richard Hill, previously the CEO of Novellus Systems. “DOC’s recently launched ‘mems|cam’ technology [sic] is a disruptive technology that will be an inflection point in – and the future of – imaging solutions in the smartphone, tablet and other mobile imaging segments.

He added: “Given the emerging acceptance of the mems|cam technology in the marketplace, we can now shift our strategy to focus on the areas of manufacturing where we have a defensible, differentiated advantage and better leverage our manufacturing partners. Our goal is to accelerate the success of DOC while reducing costs, which we expect to improve the overall financial performance of [Tessera].

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