Under the terms of the agreement, Tessera will pay $29 million in cash rising to $39 million, contingent upon milestones. The two companies will focus on increasing the sophistication of camera phone functionality.

Tessera provides various technologies for use in hi-tech industries. Its customers include Intel, Samsung, Texas Instruments, Toshiba and others. Meanwhile FotoNation develops technologies for red-eye correction; face tracking; smile and blink detection; and more. It says its technology is embedded in more than two out of three digital still cameras sold today.

“FotoNation’s solutions are a perfect complement to Tessera’s image enhancement technologies and the combined strengths of our two companies will help drive the proliferation of digital still camera functionality in mobile camera devices,” said Bruce McWilliams, CEO of Tessera.

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