Tessera to buy Digital Optics for $59.5 million

July 10, 2006, San Jose, CA--Tessera Technologies signed a definitive agreement to purchase Digital Optics Corporation (Charlotte, NC), a provider of micro-optical solutions, for $59.5 million in cash. The deal is expected to close in the third quarter of 2006.

According to Tessera, the acquisition builds upon the wafer-level image sensor packaging technology assets acquired from Shellcase in December 2005. The Digital Optics team and key technology will be components in Tessera's development of low-cost, miniaturized imaging solutions for high-volume consumer optics applications, such as camera phones, next-generation DVD players and automotive applications.

Digital Optics was founded in 1994 by a team of experts in micro-optics led by Dr. Michael Feldman. The company currently has 83 employees and 130 issued and pending patents in the areas of micro-optics and optical integration. Its 100,000 sq ft design, development, and prototyping facility will become Tessera's Micro-Optics Center of Excellence. Digital Optics' technologies are utilized in a number of applications including semiconductor equipment optics, communications and photonics. In 2005, the company generated revenue primarily by providing specialty lenses and optical sub-assemblies for the semiconductor lithography and communications markets, as well as by funded research and development for various consumer and government applications.

"This acquisition provides an additional path to significant future growth for Tessera," said Bruce McWilliams, Tessera's chairman and CEO. "By leveraging our core competencies in building IP businesses, we believe that by the end of the decade we can develop a consumer optics IP business with licensing and royalty revenues of a similar scale to Tessera's current semiconductor packaging business. The Digital Optics technology and renowned team of experts in micro-optics, combined with our Shellcase wafer-level packaging resources, will strengthen Tessera's ability to provide key imaging solutions in a variety of high-growth, high-volume consumer optics applications such as camera phones."

Once the acquisition is completed, Digital Optics will become a wholly-owned subsidiary of Tessera. In 2006, Tessera expects Digital Optics to contribute services revenue ranging from $7 million to $8 million.

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