Rambus Inc. (RMBS) recently announced the signing of a patent licensing agreement with Freescale Semiconductor Inc. for five years. Per the terms of the agreement, Freescale Semi can use Rambus’ patented DRAM memory controllers and serial links technology for its logic integrated circuit products.
Rambus will receive royalty payments based on the shipment of these devices during the contract period. Apart from this deal, Rambus and Freescale have settled all earlier claims regarding its patented innovations.
Rambus’ patented innovations have always been the key input for manufacturers to produce advanced electronic products satisfying consumer demand.
In March, Toshiba Corp. renewed its patent licensing agreement with Rambus for another five years. Toshiba was Rambus’ first licensee and has helped the company to set up a strong foothold in Japan, from where roughly 36% of 2010 sales were generated.
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. The agreement entitles Renesas Electronics to 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 architecture that are used in digital electronics products. The company reported disappointing first quarter results due to lower licensing revenue from the prior year given tough comparisons. Patent license revenue related to the settlement with Samsung in the first quarter of 2010 was significant.
Rambus’ endeavor to diversify into the lighting and display technology space in an effort to tap the tremendous opportunity in 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 #5 Rank, indicating a short-term Strong Sell recommendation.
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