UPDATE 2-Tessera raises Q2 revenue view on Motorola deal

* Motorola to pay royalties on certain product shipments

* Raises Q2 total rev view above analysts’ expectations

* Shares rise 15 pct in after-market trade (Adds conference call comments, updates share movement)

June 2 (Reuters) - Tessera Technologies Inc TSRA.O said Motorola Inc MOT.N signed an agreement to license its technology and settle all outstanding litigation between the companies, sending the chipmaker's shares up 15 percent.

Tessera also boosted its second-quarter revenue outlook as it expects the agreement, as well as better-than-anticipated revenue from other licensees, to add to its royalty and license-related revenue.

Based on the ‘pre-negotiated’ agreement, the largest U.S. handset maker will pay Tessera royalties on shipments of certain electronic products that incorporate unlicensed chips that use the company’s patented technology, the company said in a statement.

The dispute centered around the technology used to package semiconductor chips so that they are protected from damage inside wireless handsets.

The agreement follows the U.S. International Trade Commission's final verdict in May which found Qualcomm QCOM.O, Motorola MOT.N and others infringed Tessera's TSRA.O patents on technology used to package semiconductor chips.

“This is a win-win business proposition for both the companies. It enables Motorola to avoid interruption of supply to its customers,” Tessera Chief Executive Henry Nothhaft said on a conference call with analysts.

Motorola was faced with a possible interruption in supply as the ruling also included a ‘cease and desist’ order prohibiting Motorola, Qualcomm, Freescale, and Spansion from using their U.S.-based inventory to ship the infringing products.

“Generally speaking, we believe, the other respondents should take heed of the lead that Motorola has paid it and should sign up licenses,” a Tessera executive said on the call.

Tessera said it now expects second-quarter total revenue between $59.0 million and $61.0 million, compared with its prior view of $46.0 million and $49.0 million.

Analysts on average were expecting revenue of $47.8 million, according to Reuters Estimates.

Micro-electronics revenue, all of which will be royalty and license related, will be $53.0 million to $55.0 million, compared with the prior outlook of 40.0 million to $42.0 million, Tessera said.

Based on better visibility, the company said, it now expects image and optics revenue to be about $6.0 million, compared with its prior view of $6.0 million to $7.0 million.

Tessera shares were up by more than $3 at $28.08 in trading after the bell. They closed at $24.45 Tuesday on Nasdaq. (Reporting by Bijoy Koyitty in Bangalore; Editing by Saumyadeb Chakrabarty)