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March 20, 2007 4:50 pm

Toshiba and Hynix agree on licensing

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Toshiba, the Japanese electronics maker, and Hynix Semiconductor on Tuesday declared a truce by agreeing to a cross-licensing deal on Nand flash memory chips, ending a bitter 2½-year legal tussle over patents.

“We made the cross-licensing agreement due to mutual needs,” said James Kim, vice-president of investor relations at Hynix.

Toshiba pioneered Nand flash memory but it has lost its market leading position to Samsung and Hynix, both Korean groups, as demand for these chips grows rapidly with the popularity of portable electronic devices.

Samsung has more than 50 per cent share of the market. Toshiba is in second place and Hynix third. Last month, another Japanese chipmaker – Renesas Technology – launched a case against Samsung in the US claiming abuse of its D-Ram and SD-Ram patents.

In spite of intense rivalry between the companies, the deal may signal closer co-operation as they struggle against big price drops in the sector, especially for flash memory chips.

Toshiba also filed a separate complaint with the US International Trade Commission.

Signalling an end to the wrangling, Hynix and Toshiba said on Tuesday that they had signed patent cross-licensing and product supply agreements covering semiconductor technology. Under the terms of the deal, Hynix will pay Toshiba a cross-licensing fee and Toshiba is now able to buy chips from Hynix. Hynix declined to specify which products it would supply to Toshiba or to give the value of the deal.

The agreements settle all pending patent-related litigation be-tween the companies in the US and Japan. In November 2004, Toshiba filed a patent infringement lawsuit against Hynix in Japan and the US after the two companies failed to extend a cross-licensing agreement. It claimed Hynix infringed its patents relating to Nand flash memory technology in Japan and the US. It also claimed Hynix infringed Toshiba patents related to D-Ram chips in the US. In response, Hynix also claimed that Toshiba violated its semiconductor patents.

Atsutoshi Nishida, Toshiba’s chief executive and president, said last week: “There has been very drastic price erosion [with flash memory].

“In order to reduce costs we have to shift to making smaller chips three months earlier than planned due to the unexpected speed of price erosion,” Mr Nishida said.

“From April last year to this April, prices for 70-nanometre chips have fallen 70 per cent.”

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