Tessera Distributes Mid-Year CEO Letter to Stockholders

Tessera Technologies, Inc.

distributed the following letter to stockholders from Robert A. Young, President and Chief Executive Officer of the Company. Dear Fellow Stockholders: As we pass the half-year mark, I am writing to bring you up to date on our progress toward the growth opportunities we see ahead in both of our businesses. It has been a little more than a year now since our board of directors took actions to re-set the course for our two business units so they could more aggressively pursue their respective market opportunities. Our progress in these efforts strengthens our conviction that continuing to execute on the strategy in place will deliver superior returns to our stockholders. Cash-Flow Generation: Intellectual Property Our intellectual property business today generates royalties through licensing our Tessera, Inc. semiconductor patent portfolio. In the first quarter of 2012, we successfully renewed four licensees to this portfolio, including two well-known Japanese electronics manufacturers. Most recently, we announced the International Court of Arbitration of the International Chamber of Commerce issued an interim award in favor of Tessera, Inc. in its dispute with Amkor Technology, Inc. Based on our preliminary review of the interim award, we intend to seek an amount in excess of $125 million from Amkor. We are at various stages of the sales cycle with potential customers for additional portfolios we own, including for example those relating to DRAM circuitry. As discussed previously, the sales cycle for the long-term, running-royalty license agreements we pursue is largely driven by discussions among licensing teams and engineers from both parties and can take 18 months or longer to close. We continue to develop technologies in house, focused on large growth markets. Two specific examples of in-house development – our DIMM-IN-A-PACKAGETM multi-die face-down (xFD)TM technology, first announced in April, and our bond via array technology, first announced in May – are leading the way for next generation chip packaging technologies. These technologies will help OEMs meet their performance and speed requirements while reducing cost and improving efficiency. As we have said before, we may have disputes with our customers, some of which may involve litigation. Our business does not rely on or focus on one-time items that may result from litigation, such as the most recent action by Powertech Technology Inc. purporting to terminate its license agreement with us or the Amkor arbitration. Due to the strength of our multiple portfolios and our diverse revenue sources, we believe no single dispute-related event will have a long-term impact on the ability of our patent monetization business to continue to grow and generate cash flow. Growth Opportunity: DigitalOptics We are excited about the significant progress made with our digital imaging business, which is operated through DigitalOptics Corporation (DOC). DOC's breakthrough imaging technologies and products will bring full-featured digital still camera capabilities to the mobile phone camera market. My letter to investors at the start of 2012 noted DOC's large growth opportunity. Because of the aggressive steps we have taken around the globe, DOC is now well positioned to provide a vertically integrated solution to the camera module market. Our near term business goal is to quickly become a key player in the camera module market, which today is fragmented and depends on older legacy technologies. In 2012, DOC made tangible progress and completed concrete actions toward that goal with both operational and commercial achievements, including: Operational: Established expert camera and lens design teams in the US, Japan and Taiwan Acquired camera module manufacturing capability from Vista Point Technologies (a business unit of Flextronics) in Zhuhai, China, with an initial annual capacity of 50 million units Produced our first internally designed and manufactured MEMS autofocus camera module for customer sampling Commercial: Submitted for testing the first internally designed and manufactured MEMS autofocus camera modules to all targeted Tier One handset makers Successfully completed qualification testing for MEMS autofocus camera modules produced jointly with our primary module manufacturing partner at multiple Tier One handset customers Engaged with multiple Tier One customers regarding 2013 programs suitable for including our MEMS autofocus camera modules Taken together, these actions have positioned DOC to accelerate the adoption of its next-generation technologies and products, while satisfying the industry's dual sourcing requirements.