Boston, MA 05/16/2014 (wallstreetpr) – Outsourced semiconductor packaging provider Amkor Technology, Inc. (NASDAQ:AMKR) faces yet another patent challenge against Tessera Technologies, Inc. (NASDAQ:TSRA). The company faces accusation of failure to pay patent royalties to Tessera and the arbitration hearing of the claim has been set for next month.
The two companies have had a frosty relationship in recent times. This week Tessera won an arbitration case against Amkor and the company will receive about $125 million in relation to agreement violation.
10 percent interest
The arbitration penal found that Amkor Technology, Inc. (NASDAQ:AMKR) violated a license agreement that the company entered with Tessera in 1996. At the signing of the agreement, the companies agreed to address their disputes before the International Court of Arbitration of the International Chamber of Commerce (ICC). The companies also agreed that the decision reached by ICC would be binding and final to their dispute. But little did Amkor know that it would be the one to suffer in the hands of the ICC arbitration tribunal over agreement violation.
Amkor found itself on the defensive before the ICC after Tessera claimed that it intentionally and materially breached their agreement, a development that saw Tessera terminating the agreement in 2011.
In view of the confirmed license violation, Amkor Technology, Inc. (NASDAQ:AMKR) will pay a total of $145 million to Tessera and a yearly interest of 10 percent will be imposed on unpaid principal amount. Amkor already paid $20 million to Tessera in 2012. It will pay $113 million in unpaid principal and $12 million in interest, bringing its financial burden from the latest development to $125 million.
Looking ahead
Amkor Technology, Inc. (NASDAQ:AMKR) does not intend to dwell in the past. The company looks forward to the upcoming patent hearing in June but has its main focus on growing its business. The company looks to attracting more customers while making internal improvements to support profit growth.
The company concluded 1Q2014 with 9 cents in EPS, beating consensus estimate of 3 cents EPS. The quarter saw the company generate $696 million in revenue, ahead of the consensus estimate of $678 million. EPS and revenue were up on a year-over-year basis.
