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Rambus (RMBS), Winbond Electronics Enter into License Deal

Zacks Equity Research

Rambus Inc. RMBS has signed a patent licensing agreement with Taiwan-based company Winbond Electronics Corporation for an undisclosed sum. Per the terms of the agreement, Winbond can use Rambus’ patented technology (comprising server DIMM chipsets) for its integrated circuit products for five years.

Rambus will receive royalty payments during the contract period. According to Luc Seraphin, general manager of the Interface Division at Rambus, “This collaborative partnership with Winbond provides critical memory and interface technologies that address the needs and requirements to run effective data centers.”

Founded in 1987, Winbond Electronics is involved in designing, manufacturing and supplying semiconductors and several types of integrated circuits. We believe this association with Winbond will support Rambus’ fundamentals in the upcoming quarters.

California-based Rambus designs, develops, and licenses chip interface technologies and architectures that are used in digital electronics products.

Licensing agreements are a recurring revenue source for Rambus, the result of successful monetizing of its patents. Rambus’ patented technologies are of great importance to chipmakers for manufacturing advanced chips used in computers and electronic goods.

Going forward, we believe that Rambus is well poised to capitalize on the rising popularity of energy-efficient lighting and LED products in the latest architectural, retail, commercial and residential lighting fixtures.

Notably, Rambus is going through a restructuring phase and we expect it to yield favorable results.

Furthermore, the acquisition of certain serial link assets of Semtech Corporation’s SMTC Snowbush IP and Smart Card Software will enhance its product offerings, thereby boosting its top and bottom line performance in the to-be-reported quarter, in our view.

Nonetheless, competition from Semiconductor Manufacturing International Corp. SMI and Advanced Micro Devices AMD and customer concentration remain headwinds for the company.

Rambus’ stock price over the last one year has risen only 26.9%, underperforming the Zacks Categorized Electronics-Semiconductors industry, which has showcased an increase of 79.9%.

Currently, Rambus has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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