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Intellectual property

Satisfactory Essays
1. Consider the difficulties Tessera has faced in getting paid for its chip scale packaging technology. What alternatives did it have monetizing this inventions? What are the pros and cons of its current and these alternative strategies?

The licensing model of Tessera in the late 90’s majorly involved carrot licensing deals. In such deals the company would licence their patents and trade secrets related to in-house developed revolutionary chip manufacturing technology. The advantage of this model was that it gave the company an opportunity to integrate its technology into the evolving semiconductor supply chain. There were certain drawbacks to this model. Firstly, these deals were quite lengthy as they would involve a number of steps such as pilot production, in house training and technology transfer. Even after these steps were perfectly executed, revenue from the deals were dependent upon the commercial success of the clients product. Tessera also had adoption issues, especially with its chip scale packaging technology. Switching over to this new technology involved a lot of capital risk and no company was ready to radically modify their manufacturing line. So Tessara not only had to demonstrate that its technology was better than the conventional technique, It also had to set up huge manufacturing lines on its site to show the commercial viability of the technology. This involved years of R&D and millions dollars worth capital investment. It was also very hard for them to convince other companies restructure their expensive assets and to use Tessera’s technology on their circuits. As mentioned earlier, Tessera’s revenue were dependant upon the success of their clients technology, i.e. the volume of the chips produced. In man...

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...rce analysis on the industry. There is a low level of competition as this is the first company to develop this technology. Hence there is a very low chance of new entrants as such an innovation would take time and resources. Tesera has bought the rights of its closest competitor Kronos.There is a moderate threat of substitution as the manufacturers can still use the the traditional fan technology. This wont be factor when computer devices start becoming smaller in size. They may face some buyer power as the customers may have huge demand once their technology gets widely adopted. The supplier power does not matter in this case. Hence according to the above analysis, Tessera can play to its strength and become a contract manufacturer. The only drawback is that this strategy can involve a lot of capital investment, but it surely does protect its IP rights and revenues
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