Rambus Inc. (RMBS) recently announced the renewal of its patent licensing agreement with Toshiba Corp. for five years. Per the terms of the agreement, Toshiba can use Rambus’ patented DRAM memory controllers for SDR, DDR, DDR2, DDR3 and other devices.
Rambus will receive royalty payments based on the shipment of these devices during the contract period. This renewal agreement is a continuation of a long-standing relationship between the two (Toshiba was Rambus’ first licensee).
Business with Tokyo-based Toshiba has helped Rambus to set up a strong foothold in Japan, from where roughly 36% of 2010 sales were generated. Other Japanese customers include Elpida Memory Inc. Sony Corp. (SNE), Fujitsu Ltd. and Panasonic Corp. (PC).
But the recent radiation leaks at Japan’s Fukushima Daiichi plant are forcing foreign firms to shut down operations in the region. We wonder if this could affect Rambus, as Toshiba has temporarily closed operations at its plants and offices in the affected areas.
In December, Rambus had renewed another patent licensing agreement with Renesas Electronics Corporation, a company formed through the merger of Renesas Technology Corp. and NEC Electronics Corporation. Per the terms of the agreement, Renesas Electronics can use patented innovations of Rambus in its broad range of logic integrated circuit products.
California-based Rambus designs, develops, and licenses chip interface technologies and architectures that are used in digital electronics products. The company reported encouraging fourth quarter results based on higher licensing agreements, but missed the Zacks Estimates on the bottom line. Though Rambus guided toward a sequential decrease in revenue, we believe that the growing licensing agreements will allow the company to surpass its own guidance.
Rambus’ endeavor to diversify into the lighting and display technology space in an effort to tap the tremendous opportunity of solid state lighting is encouraging. Though Rambus has won a favorable ruling from the U.S. International Trade Commission for lawsuits filed against various parties, including chip maker Nvidia Corp. (NVDA) and PC makers Hewlett-Packard Co. (HPQ) and Asus Computer International Inc., pending lawsuits against Hynix and Micron Technology Inc. (MU), as well as competitive pressure from Samsung Electronics are concerns.
Currently, Rambus has a Zacks #3 Rank, indicating a short-term Hold recommendation.
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