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Altera settles patent disputes

The specialty chipmaker has signed royalty-free cross-licensing agreements with Lattice Semiconductor and Xilinx, dismissing all patent litigation.

Specialty chipmaker Altera has settled patent litigation with two competitors.

Altera has signed royalty-free cross-licensing agreements with Xilinx and Lattice Semiconductor, dismissing all patent litigation.

Under one settlement, Altera will pay $20 million to Xilinx, and both companies have agreed not to bring further actions for five years. In the other settlement, no money will change hands, but Altera and Lattice will not bring further actions against one another for an undisclosed period.

The conflict with Lattice originated in 1994 when Advanced Micro Devices sued Altera. In 1999, Lattice replaced AMD as a party after it acquired AMD unit Vantis.

In June 2000, Altera sued Xilinx, alleging that the Virtex chips violated three Altera patents. In November, Xilinx won a round in federal court. The following month, federal trade regulators agreed to investigate Xilinx's complaint that Altera was importing products that encroached on Xilinx patents.

Altera and Xilinx are based in San Jose, Calif. Lattice is based in Hillsboro, Ore.

The truces come amid analyst concerns that the patent wars among the companies were detracting from financial performance.

Altera's second-quarter earnings, announced this week, beat Wall Street estimates by a penny. Excluding one-time charges--a $127 million pre-tax charge for inventory write-downs and restructuring and the $20 million payment to Xilinx--Altera's earnings came in at $36 million, or 9 cents per share. That compares with $98.3 million, or 23 cents per share, in the same quarter a year ago.

A consensus of analysts had been expecting Altera to report earnings of 8 cents per share, according to First Call. Last month, Altera laid off 7 percent of its work force.