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Rambus, LSI Sign Licensing Deal

Zacks Equity Research

Rambus Inc. (RMBS) signed a patent licensing agreement with chip-making company LSI Corp. (LSI) for an undisclosed sum. Per the terms of the agreement, LSI Corp. can use Rambus’ patented technology for its integrated circuit products for five years.

Calif.-based LSI Corp. specializes in providing high-performance semiconductors. LSI’s semiconductors are widely used in hard disk drives, solid state drives, servers, storage systems, networking and personal computers. LSI produces the chips with the help of technologies provided by Rambus.

Rambus will receive royalty payments based on the shipment of these devices during the contract period. Apart from this deal, Rambus and LSI have settled all earlier claims regarding its patented innovations. Rambus and LSI have been involved in several patent infringement lawsuits since 2010

Rambus’ innovative patented technologies are of great importance to chipmakers for making advanced chips to be used in computer or electronic goods. Hence, the company has been signing a number of multi-year licensing deals each year, primarily with semiconductor companies. Over the past few months, Rambus has licensed its technology to Fujitsu Semiconductor Ltd., NVIDIA Corp. (NVDA), Broadcom Corp. (BRCM) and MediaTek Inc. for their respective integrated circuit products.

Though Rambus’ technologies are getting popular, they often attract infringement lawsuits. The company had its share of success defeating tech big shot NVIDIA, but lost lawsuits against Micron Technology Inc. (MU), and STMicroelectronics (STM).

We believe that Rambus’ growth story would remain intact, given its ability to settle legal claims, growing exposure in the LED arena and continuous deal wins.

We are also positive as Rambus raised its first quarter 2013 revenue guidance to reflect a one-time licensing payment. The company’s fourth quarter results were also encouraging.

Currently, Rambus has a Zacks Rank #1 (Strong Buy).

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