Graphics chipmaker Nvidia Corp is buying about 500 wireless communications patents from privately held IPWireless, as it locks horns with Qualcomm Inc in the lucrative market for smartphone and tablet chips.
The company is acquiring the patents jointly with Intellectual Ventures -- a privately held patent-holding company co-founded by former Microsoft Corp Chief Technology Officer Nathan Myhrvol.
The patents comprise those granted and pending in the wireless communications area, including Long Term Evolution (LTE), LTE-Advanced and 3G/4G technologies, the companies said in a statement.
Nvidia, traditionally known for its graphics processors for PCs, has been expanding into the market for chips used in mobile phones through acquisitions and by investing heavily in developing core processors.
"They are a new entrant into the market (for wireless networking chips), so in order to leverage their Icera acquisition they had to make sure they had the necessary IP," ThinkEquity analyst Suji De Silva said.
Nvidia bought UK-based Icera for $367 million last year to gain a foothold in the market for baseband or radio chips -- which are used to connect devices to cellular networks.
Nvidia's Tegra suite of mobile processing chips have found favor among smartphone makers, giving strong competition to market leader Qualcomm.
Nvidia will split the ownership of the patents with Intellectual Ventures, but will license the rights to the remaining patents.
Financial details of the deal were not disclosed.
Wireless broadband network equipment provider IPWireless Inc is selling the patents after General Dynamics agreed to buy its parent company, IPW Holdings Inc, last week.
The growing importance of patents, which are increasingly becoming differentiators among mobile phone makers as they try to stifle competition, has led to a wave litigation related to intellectual property.
"There are thousands of patents of interest out there. We haven't seen full-out litigation back and forth in the wireless patents space yet, but customers care about the strength of the patent portfolio," De Silva added.
Google is buying phone-maker Motorola Mobility for its 17,000 patents and 7,500 patent applications, as it looks to compete with rivals such as Apple Inc.
A consortium comprising of Apple, Microsoft, Research in Motion and others paid $4.5 billion in a hotly contested auction of bankrupt Nortel's patents last year.
Nvidia shares were down less than a percent at $13.16 in afternoon trade on Monday on the Nasdaq.
(Reporting by Himank Sharma and Supantha Mukherjee in Bangalore; Editing by Saumyadeb Chakrabarty)