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© demarco dreamstime.com Components | March 28, 2013

Tessera to restructure DigitalOptics business

Tessera Technologies is refocusing its DigitalOptics Corporation business strategy to reduce costs.
The Company expects to reduce operating expenses in DigitalOptics Corporation (DOC) and Corporate Overhead by approximately $78 million, or 45%, on an annualized basis exiting 2013, as compared to 2012.

The Company has determined that it is no longer necessary for DOC to be a vertically integrated camera module supplier. DOC will instead focus its strategy on the differentiated MEMS-related technologies, where it has proprietary assembly technology and expertise, and will partner with third-party manufacturers to produce other components of the full camera module. DOC will continue to productize the mems|cam technology throughout the rest of the year, and expects to ship small production volumes of its technology in 2013.

DOC will accelerate the use of partner manufacturers for the production of camera modules and will focus its own manufacturing on the lens barrel assembly, which is a higher-margin component for which DOC has unique proprietary technology. This approach will cut DOC's expected capital spending in 2013 by roughly half — to a range of between $5 million and $7 million, as compared to the Company's previous estimate of $10 million to $15 million.

DOC is consolidating its manufacturing capabilities into its Taiwan facility and expects to cease all operations at its leased facility in Zhuhai, China. DOC will transfer a portion of the manufacturing equipment located there to Taiwan.

DOC will terminate its current lens manufacturing program and instead will focus on designing lenses that its partners can produce for use in DOC's proprietary assembly technology.

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