Samsung, SK Hynix have chip licensing agreement

Samsung Electronics and SK Hynix, the world’s two largest producers of computer memory chips, said yesterday they have reached a comprehensive cross-licensing contract with respect to semiconductors.

“We have come to concentrate on technological innovation instead of waging an unnecessary and exhaustive battle in the aftermath of patent conflict - thus gaining a revolutionary ground to contribute to the progress of global semiconductor technology,” said Samsung. The top chip maker added it hopes the partnership “serves a meaningful precedent for preventing unnecessary conflict among local IT firms.”

Samsung memory chips accounted for 35.4 percent of the global market last year, according to market researcher iSupply, followed by SK Hynix at 16.6 percent. In the dynamic random-access chip (DRAM) sector, the two companies’ combined global market share was 77.5 percent in the first quarter, according to DRMeXchange.

Although neither has confirmed it, Samsung recently approached SK Hynix about buying mobile DRAM chips to meet demand for smartphones and tablet PCs in the third quarter, according to industry sources. If the deal is realized, the two foes would become strategic partners in the semiconductor sector - like Samsung and Apple in the smartphone and tablet business.

SK Hynix, the chip-making arm of the nation’s third-largest conglomerate, SK Group, also said the deal is “hugely meaningful in that it has resolved the potential of patent conflict.” They have been negotiating the deal the past three years, although they did not unveil details of the terms.

Under the contract, the companies will share tens of thousands of chip-related patents, together guarding against potential attack from competitors as well as from so-called patent trolls that who buy up patents with no intention of using them for manufacturing or innovation.

Such technology licensing firms as Intellectual Ventures and Rambus are labeled as patent trolls. Samsung owns 102,995 patents, including those in involved with semiconductors, whereas SK Hynix has 21,422.

Samsung last year was subject to the second-largest number of patent attacks of any company in the world, according to PatentFreedom, an online community of companies that access and share information about nonpracticing entities that own and enforce patents. Apple topped the list with 44 cases, followed by Samsung at 37 and LG Electronics at 24.

From 2000 until early last month, SK Hynix was engaged in a patent dispute against Rambus over memory-chip technology. It ended when SK Hynix agreed to pay $240 million.

A cross-licensing deal between tech firms is not new. Samsung in 2010 entered a 10-year cross-licensing deal with Micron Technology and SK Hynix agreed with Toshiba to share flash memory interfaces in 2007.

BY SEO ji-eun [spring@joongang.co.kr]