Sunnyvale, Calif.-based CMOS image sensor supplier OmniVision Technologies Inc. said today it would acquire privately held, Boulder, Colo.-based CDM Optics Inc.

CDM Optics has technology designed to improve digital camera system performance by increasing the depth of field and correct optical aberrations of photographic images, according to OmniVision. CDM's wavefront coding technology uses optics and algorithms to transform the task of focusing a lens from an opto-mechanical process to one of optical encoding and signal processing, the companies said.

By merging optics design and digital signal processing, wavefront coding is designed to expand the depth of field of an image, so that the image is in focus over a wider range of distances from the lens than is possible using conventional focusing systems. By eliminating motors and actuators, the technology allows reduction in size and complexity of the auto-focus function on a camera module, the companies also purported.

"Combining CDM's expertise in optics and signal processing with our expertise in developing powerful image data processors will increase the value of our content in the camera system," Shaw Hong, OmniVision chairman and CEO, said in a statement.

"By shifting from mechanics and conventional optics to advanced high-volume silicon processes, camera phone makers will be able to reduce the overall cost of an auto-focus and zoom camera module while reducing the reliability issues and supply limitations associated with current systems," he said.

OmniVision said the technology allows digital still camera makers to incorporate auto-focus functionality in high-volume entry-level products. The technology is also applicable in emerging markets for CMOS image sensors such as automotive and medical-imaging applications, according to the company.

Under terms of the acquisition agreement, of the $30 million purchase price, $20 million is payable at closing, $10 million in cash and $10 million in OmniVision common stock with each share valued at 140 percent of the average closing price of the stock for the five trading days prior to the last trading day before closing.

A further $10 million is payable in cash following the shipment by OmniVision of a predetermined number of revenue-producing units that incorporate CDM's technology.

Following the closing, all of CDM's 18 employees are expected to remain with the company, and CDM will operate as a wholly owned subsidiary of OmniVision.

CDM is to remain in its existing location close to the Boulder campus of the University of Colorado, whose affiliate, University License and Equity Holdings Inc., owns the patents, and where the early work on its technology was done.

The companies expect the transaction to close no later than April 30.

From ElectronicNews