The End of MIPS – Or Just the Beginning?

There is some big news recently in the world of processor IP. Imagination Technologies has officially acquired MIPS Technologies for $60 million, including the operating business of MIPS, 82 of its patents, and license to all right of the remaining patent properties of MIPS. An ARM-led group, Bridge Crossing, is buying MIPS’ remaining 498 patents for approximately $350 million. This development does not come as a complete surprise, as MIPS was likely feeling the squeeze between the colliding superpowers of the embedded space, ARM and Intel, and growing IP competitors like Imagination.

One interesting question is who got the better deal out of this, Imagination Technologies or the ARM-backed group?

While Imagination no doubt will benefit from MIPS’ customer base, ARM has acquired a powerful package of patents, which likely position it strongly for penetration into market segments that MIPS supported. Then again, Imagination and ARM appear pretty chummy these days, as both are members of the Heterogeneous System Architecture (HSA) Foundation, along with a growing list of companies including AMD, MediaTek, Qualcomm, Samsung and TI. Of course, the alliance does not change the fact that at the end of the day, ARM and Imagination Technologies are both IP companies and therefore will always be competitors on some level. MIPS had particular strength in networking, automotive, microcontrollers and storage, so it can be expected that Imagination will have a stronger play into those market segments going forward. The immediate challenge for Imagination is how to best integrate MIPS into the Imagination organization and provide a cohesive roadmap that brings together the best of MIPS and Imagination’s IP technology.

More generally, with the economy in EMEA still weak and the “Fiscal Cliff” approaching in the US, it would not surprise me in the least to see more consolidation within the semiconductor industry. Before year’s end, I am sure we will see a couple more acquisitions quietly transpire as stronger companies scoop up bargain discounts.