ARM Shares Rise After Apple Report, MIPS Patents Deal

ARM Holdings Plc, designer of the most popular chips for smartphones, rose 2.1 percent in London today after it entered a deal for patents and client Apple Inc. was said to be exploring ways to replace Intel Corp. chips in its personal computers.

The shares climbed 14.5 pence to 709.5 pence. ARM will provide $167.5 million to Bridge Crossing LLC, a group of technology businesses that will pay $350 million in cash to MIPS Technologies Inc. to obtain rights to its portfolio, which includes 580 patents and patent applications, Cambridge, U.K.- based ARM said in a statement today.

Separately, Apple engineers have grown confident that the chip designs used for its mobile devices will one day be powerful enough to run its desktops and laptops, said three people with knowledge of the work, who asked to remain anonymous because the plans are confidential. Apple has created designs for its best-selling iPhone and iPad based on ARM technology.

The Apple news suggests “ARM chips are able to compete in Intel’s home markets,” said Paul Morland, an analyst at Peel Hunt in London. “The bigger factor is this announcement about the MIPS patents. It’s a defensive move by ARM, but it makes sense because it protects itself from litigation on the 580 patents.”

Litigation Danger

ARM said the MIPS transaction will support innovation and remove any potential litigation risk. The patents and patent applications cover microprocessor design, system-on-chip design and other related technology fields, the company said.

“Litigation is expensive and time-consuming and, in this case, a collective approach with other major industry players was the best way to remove that risk,” ARM Chief Executive Officer Warren East said in the statement.

The consortium will make licenses to the patent portfolio available to companies outside the group, it said. ARM will fund the payment through existing cash reserves.

The transaction is expected to be closed in the first quarter of 2013, pending MIPS shareholder approval and customary closing conditions.

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