Rambus Inks Licensing Deal With QUALCOMM, Updates Guidance - Analyst Blog

Rambus Inc. RMBS recently signed a patent licensing agreement with QUALCOMM Incorporated's QCOM Global Trading Pte. Ltd. division for an undisclosed sum. Per the agreement, both QUALCOMM and its subsidiaries can use Rambus' patented technology for their mobile chipset.

Other terms of the agreement also stated that Qualcomm will be able to use Rambus' unit, Cryptography Research, Inc.'s CRI patented Differential Power Analysis (DPA) countermeasures across a wider range of products. The technologies will secure Qualcomm's tamper-resistant integrated circuits systems on a chip (SoCs). Leveraging Rambus' patent portfolio, Qualcomm will bring in more innovative technological solutions for end users.

Qualcomm designs, manufactures, and markets digital wireless telecom products and services based on the Code Division Multiple Access (CDMA) technology. Rambus can use Qualcomm's fundamental mobile operating system techniques for its integrated circuit products. Moreover, this patent deal will enable Rambus to more aggressively expand into the global mobile chip market.

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. Rambus has already licensed its technology to Fujitsu Semiconductor Ltd., NVIDIA Corp. NVDA, Broadcom Corp. BRCM, Nanya Technology Corporation, Samsung Electronics, Micron Technology and MediaTek Inc. for their respective integrated circuit products.

Buoyed by these recent licensing agreements, Rambus updated its second quarter fiscal 2014 revenue guidance. The company expects second-quarter revenues to range between $75.0 million and $77.0 million (previous guidance $69.0 to $74.0 million).

Moreover, the company expects to introduce several innovative products and services in 2014 that would support its revenue growth, going forward.

However, competition from Semiconductor Manufacturing International and Advanced Micro Devices, and oversupply in the semiconductor market remain concerns.

Currently, Rambus has a Zacks Rank #3 (Hold).

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