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NEW YORK - Texas Instruments says it has set a licensing pact with Samsung Electronics of Korea that will generate royalty payments of more than $1 billion over 10 years.
In exchange, each side agreed to drop pending patent infringement lawsuits against each other.
The agreement replaces a previous five-year deal that expired at the end of 1995, the Dallas-based maker of computer chips, notebook computers and other electronics products said.
While the deal reassured some Wall Street analysts who were not already counting on additional earnings from the settlement, others noted the terms appeared to be far less generous than one with Samsung in 1995.
"Texas Instruments appears willing to take a lower number to get the suits dropped against them," Merrill Lynch analyst Thomas Kurlak said.
"Our assessment is that the agreement is at roughly 40 to 50 percent of the rate of the old agreement," Kurlak said of the royalty formula Samsung will use to pay Texas Instruments.
The new license, which runs until the end of 2005, covers a broad base of patents from both companies, including those for semiconductors, personal computers, consumer products and telecommunications equipment, Texas Instruments said.
The company in 1985 started to more aggressively defend alleged unauthorized use of its technology in a bid to improve the value of its intellectual property within the semiconductor industry. In the intervening decade, the company has won billions of dollars in additional royalties, a spokesman said.
Texas Instruments said it expected Samsung to pay it about $105 million in the fourth quarter for "catch-up royalties" covering the first nine months of 1996 when the companies were battling in court.
Analysts said the "catch up" payments should substantially boost earnings for the quarter ending in December, but the gain will be offset by a charge for an undisclosed amount the company plans to take for an early retirement program.
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