By 2003, Tessera's packaging technology sat inside more than 2.5 billion chips, and Tessera made almost none of them. The San Jose company licensed its designs for chip-scale packages, the tiny casings that connect a silicon chip to a circuit board. Forty-four companies paid to use them in memory, DSP and Flash chips. Tessera filed in the fall of 2003, as the chip market climbed out of the dot-com bust, with a rare thing among tech IPOs: profits.

Selling Ideas, Not Chips

Tessera was incorporated in Delaware in May 1990. From 1990 through 1995 it did mostly research into chip-scale and multi-chip packages. It started earning license revenue in 1994. The pitch to chipmakers was size, speed, reliability and cost. Smaller packages meant smaller phones and denser memory modules. Tessera collected royalties on each chip that used its patents, so it grew when its licensees shipped more. In 2002 it earned $6.5 million on revenue of $28.3 million.

Royalties and Courtrooms

Tessera priced at $13 a share in November 2003 and listed on Nasdaq as TSRA. Its patents became its main asset, and it spent years suing and settling with big chipmakers over royalties. In December 2016 it merged with the audio company DTS, and in 2017 the combined company took the name Xperi. In 2022, Xperi split off its product business, and the patent licensing company that began as Tessera renamed itself Adeia.

Cover: Mosaic Fragment with a Man Leading a Giraffe, Byzantine. Art Institute of Chicago, public domain. Chosen for a Byzantine mosaic made of tesserae.