Rambus' CEO Presents at Citi Global Technology Conference (Transcript)

| About: Rambus, Inc. (RMBS)

Rambus, Inc. (NASDAQ:RMBS)

Citi Global Technology Conference

September 3, 2013 1:35 PM ET

Executives

Satish Rishi - SVP and CFO

Ronald Black - President and CEO

Analysts

Terence Whalen - Citigroup

Terence Whalen - Citigroup

I am Citigroup's Specialty Semiconductor Analyst. It's a pleasure to have Rambus here with us today. With us from the company are CEO Ron Black; and CFO, Satish Rishi.

So why don't we go ahead, the format this afternoon will be Satish will start with a presentation, updating us on Rambus and then we will go ahead into fireside chat and we will leave time as well for Q&A. Thanks. Satish?

Satish Rishi

Thank you, Terence. Hello everybody. So I will briefly walk you through a company overview and then we will delve deeper into the various business segments we have, to the Q&A process. I'd like you to draw attention to our Safe Harbor agreement over here -- Safe Harbor statement over here.

So very quickly, when you look at the company, we have a company of engineers, and we have 250 employees of which close to 70% of them are engineers. We have teams split out globally, primarily in Sunnyvale, San Francisco, Chapel Hill, Brecksville and also in Bangalore.

We regenerate technology and recreate patents and we probably generate about nearly around 150 to 200 patents a year, and most of these are forward-looking patents and technologies, and these are semiconductor, on the memory interface side, in the Cryptography Research side and also in the LED applications phase.

We have a high gross margin business and we have recurring royalties, specifically our license terms are for five years, and they can be fixed or they can be variable. So once we sign a customer, we have a lot of predictability in our revenue model going forward for the next five years, and typically we renew our customers every five years, sometimes three years, and with that, a fair amount of success in renewing our customers in the last 15, 20 years of being in the business, with like multiple renewals under our belt.

If you look at our last 12 months credentials, our customer licensing incomes, which is a non-GAAP measure of revenue or substitute for revenue that we use, is being fairly stable and growing, but our profitability has been growing fairly well in the last couple of quarters, as you can see -- on this chart you can see, we had about an 8% market at the beginning and now we have probably about a 14% margin.

We have had some changes in our strategy, and Ron joined us last year, it has been about 12 months, and we have had a change in senior management and change in leadership. We've evolved a new strategy and (inaudible) something would come to you, the tagline we used to have was, we are a company of inventors, and now really the -- what we have modified that to be is like, you can be good inventors, but if you don't take invention to market, and you can monetize it, (inaudible) the value, then there will be infill points having good inventions. So you really have to monetize and take invention to market.

We have also diversified. We are extremely well known for memory interface technology. We have diversified into security and LED lighting applications. We have also gotten the way -- we had a bad rap of being very litigious and we have begun the process of settling; past litigation you have and you will see some of that come to this presentation, the dialog we have, and we are moving towards more of solutions than IP licensing.

Just as a quick update, just to put into, to show you what the past has been in terms of litigation update. Through the last 18 months, these are some of the litigations that we have settled, and the last one we talked about was -- the last announcement was settling with Hynix, where Hynix will be paying us about $12 million a quarter for the next five years.

We are evolving a business model. We have been well known for the mentioned markets, primarily in the patent licensing or the architectural licensing. We have started evolving and growing it to, including more of technology licensing, where we actually create solutions that are unique to our customers, products, and then when a customer ships the product, we get paid a running royalty on those products that are shipped. And we are also moving to the higher tier, because we believe it can create more shareholder value by moving into some lines of products and services, and not just monetizing the patent licensing.

So part of the change that we have seen occur in the company is, looking at more ways than one to monetize our technologies, and not just to patent licensing, but in many different ways, to the extent that we -- what might have been considered heresy a couple of years ago, we have even sold some of our patents that we felt somebody else could monetize better, or somebody just come to us and say, we like those two patents of yours, we'd like to buy them, and we'd just find -- for the right price, we will sell them to you, and we have done that in the past. So bottom line is, we have been flexible in how we look at monetization.

As I mentioned, we have been more collaborative; this is a snapshot of the collaboration that we have announced, or our customers have announced, [since always driven your] customers have been constantly saying that Rambus is partnering with -- we are partnering with Rambus versus Rambus is the one making the press release. So I wouldn't go through each one of these, but with Globalfoundries for example, we signed an agreement with them, where we will provide them with interface and IO/IP licenses, and then when they incorporate that technology in their particular product, and they do a tapeout, we get paid; and when they customers use that IP block in their products, we get paid by the customers also. So this is a good way for us to broaden the monetization that we can provide, but also, it is great to be working with Globalfoundries, the number two foundry in the world.

We will spend a little more time as we go through the Q&A on our three key business units; we have a memory interface division, cryptography division and then lighting (inaudible) division.

Bulk of our revenue, about 85% of our revenue is coming from the memory and interface, but the other two are our largest growing segment, just because it is coming from a lower base, and we are expecting that these will grow to be larger percentages of the overall company revenue over time.

So very quickly on the financials, as you can see, looking at the quarterly top line graph. We have been fairly stable between $60 million and $70 million for the last couple of quarters. If you look at the last 12 months, we have a $257 million looking at the LTM as of Q2 2013. These numbers don't include Hynix, so you can add into that $12 million -- on top of these numbers on a quarterly basis that we will start receiving from Hynix in Q3 of this current quarter that we are in.

Just a quick breakdown of where we get our revenue from; so we have, like as I mentioned, we have different sources of revenue we get. Revenue from patent licensing, which is a very top line, and we also get revenue from solution licensing, which again is very sticky and has a long tale to it. A good example of this is the Sony PS3 Station, where you work with Sony and since 2006, we have received probably like $60 million, $70 million over that term and we expect that tale to continue over a period of time.

Just a quick breakdown on looking at what is in the expense management. Last August, we did look at expenses, and we reduced our expenses through managed -- cutting a lot of programs that we found were frivolous and also a small reduction in force, and also reducing our litigation expenses, as you can see, we are now running close to like $1 million, $2 million quarterly run rate down from $7 million, $8 million about a year ago. But also, with the reduction in expenses we have, our pro forma EBITDA, you can see we went from 22% to 33%, so 11 points of margin and about $30 million, and again this is without Hynix, so you add another $12 million, that also would increase that.

So we are a company that went through a transition, and things are far more stable, we have lot more collaboration with customers, more dialog with customers, a lot of litigation is behind us, and we are looking forward to continuing this trend going forward.

So with that, I will turn it over to Terrence.

Terence Whalen - Citigroup

Thank you. Thanks Satish. Let's see, maybe I will kick off with asking Ron, you have been here about 12 months at Rambus, formerly with AuthenTec. Obviously, very different organizations. Maybe if you can share with us your view of the organization, your strengths, what needs to be culturally changed and the vision from here?

Ronald Black

(Inaudible). We continue to have that opportunity to progress through that (inaudible). And so the core assets that you are working with from a human capital is extraordinary. So what we have done, from a cultural standpoint, is move past from the litigations to trial, till we separate this business, and really set (inaudible). We are going to establish market rates, we are going to collaborate (inaudible) ARM or CIBA or imagination, don't think about this as much as the other people, because we are developers at heart. I think the thinking is like that, they like that better, they love the type of facility engagement, they are pretty sticky to revenues, and that bodes relatively well for us, and we just continue to move on to that line.

Terence Whalen - Citigroup

Okay, terrific. I think maybe instead of starting with the memory interface division, we can start with some of the newer businesses that are perhaps less familiar to some of the investors here. Can you take us through, maybe the cryptography business and then the lighting business? Pretty quickly, just sort of a broad understanding of what those businesses are like, and then we can kind of dig in more?

Ronald Black

So, on all the businesses, what we look at, is find this core about devices, solve the industry problem. We do take our patents to protect their (inaudible), and when we look to bounce back and license it in a more broad way. So with respect to -- as in terms of the memory here, for instance, it's really about signaling how we are aggregating, and making things go really-really fast in very little power.

In the cryptography stage, there is a particular set of hardware vulnerabilities, in course of the event that you have a five channel attack, where just a switching circuit can leak information and leak and fuse and pull out the secret keys and (inaudible). And in there, these technologies who brought their license in the smartcard industry, so chip within card, so that's the bulk of the revenue today in that business, and we are taking that same knowhow and extending it. So traditional assets -- so companies like Broadcom, who are number one in set top boxes, they like to (inaudible) technology broadly, articulated with the (inaudible) followed the set top box chips, soon after that electronics, (inaudible) set top boxes expanding to (inaudible) expand our license and to work with (inaudible) off late.

So we are moving to traditional access to anti-counterfeiting and ultimately, we are looking at a (inaudible). So this classic technology, they enhance that, as they obtain a device, there would be (inaudible), for smartcards, credit cards that use chip and PIN technology, that's used in MasterCard as a requirement. Not an option, it's the requirements that we'd like to (inaudible).

So we see that many things that connects with the internet is going to need our classic cryptography. They are small, hardware-based, with some nice systems to go on.

On the LED side, it's a little bit different. This is not a semiconductor space, it's strictly the way that the semiconductor's LEDs are semi-conducted. But what we work on there is just optical distribution of that light from semiconductor is now -- semiconductor devices.

So in that case, what we do, is we manage how the lighting goes through the system, a typical general lighting fixture for the display, the technologies you can display. And that simply is the case that patents rely on how you could basically put the light, where one wants it.

It's really hiked here, okay. So on that LED business, the patents that we have and the IP that we transfer, in fact we are doing some injection molding, believe it or not, at some parts in low volume quick turn prototype thing, that's really enabling customers to help produce the most efficient light and at lower costs.

Terence Whalen - Citigroup

Okay, terrific. So as we look at these businesses individually, can you just give us a better idea, as to how you think the cryptography business grows and develops over time, and what really needs to happen for that to be a material contributor of growth to Rambus?

Ronald Black

Sure. Well may be starting at the highest level; while we haven't broken out the businesses yet in any detail, we certainly plan on doing that probably in the early part of next year. So we are going to give investors an opportunity to see in more detail, the underpinnings of that, and why we think this is great.

For all of them, we think that the served available market is at least as large as the business that we have, the bulk of the business in the memory area. So we are talking $250 million plus. So we can double or triple the size of the company over the coming years.

I look at that, in terms of conditional probability problem. So not to take people back to their MBA days, but as we -- you look at the contract protection. Once we had one customer, Broadcom adopted, and see the value of it, they very quickly became interesting to the next general vendor. And that's how we are looking at it across the board. We have worked and we have announced that we are doing stuff with the printer company, on anti-counterfeiting. The second that that started to roll out, where we actually protect the ink and make sure that it's not counterfeit. We had more interest from other printing companies, and we have moved beyond that.

Same thing with the handsets. Ideally, we want one handset vendor to adopt the technology and broadly deploy that, if we do, you could imagine having many others do it as well. So the size of it is equal at least to the size of the existing business, and the growth will be dependent on how successful we are rolling it over -- rolling it out over the next coming year or so.

Terence Whalen - Citigroup

And just to be clear, the view that this is more of a licensing or more of a hardware business?

Ronald Black

I look at all of these as licensing course, or licensing designs and knowhow. I mean, the patents at core asset is what the people want. Obviously, they don't want to have a patent problem. But it's really enabling the customers to bring it to market very-very quickly. More and more of the customers on the cryptography side, they are licensing the course. So think about it as a little secure microprocessor, that is embedded into their SOCs, that they produce and sell to the customers. So we are really more like an arm in that play, because without it, it takes a very long time to teach them, to use the technology, deploy it. There is a long education process, where as if we license on the core, and the core has the differential power analysis countermeasures. Our secret is off, it's much easier to bring to the market.

Terence Whalen - Citigroup

Okay. So that involves also -- it sounds like engineering assistance as well, education, how has it been over the past year, in your perspective, in terms of the shift in culture to becoming more of a contributor, as opposed to perhaps an adversary?

Ronald Black

Well I think any engineer -- I am an engineer myself, you always want to work with customers. You like to see your inventions put into the marketplace. So when these (inaudible), you are just happier, it's a general positive state. So we are all -- let's say, looking forward to the time when that's the only option that we have. We only have Micron one, right. One more litigation to settle, and then we are pretty clean.

We might have to do something periodically, but it's certainly -- if it is, it's not our fault.

Terence Whalen - Citigroup

And then, I was trying to actually understand a little bit better, the relationship with Globalfoundries as well. Satish, you mentioned that that began at the beginning of this year. How exactly are you organized to work with them?

Satish Rishi

The way the engagement will work is, we sign a monthly agreement with them, and then we will have a couple of different SOWs where we will be working on different technologies. I think right now, what we'd like to work on is something like a 40-nanometer sensor technology. So we will work with them, and you will have a group of engineers, who'd be deployed working on that particular project, and we will make sure that that part of it is profitable, so that when we have -- whatever the [image] is costing us, we are getting paid for that. So that becomes one sort of revenue stream for us.

Then one set is incorporated into their, into Globalfoundries Technology, which might take 12 to 18 months, and when through a tapeout, we will get paid the royalty; and then when the customers come in pick up -- from the IP library to pick up the particular IP protocol and then drop that into their particular chip, then we get paid by the customer. So that's where we will have multiple streams of revenues coming on for that one engagement, and we expect to have multiple engagement of nodes with them going forward.

Terence Whalen - Citigroup

And so, what's the timeline like for that activity to ramp with Globalfoundries?

Satish Rishi

The actual engagement is happening now, and by the time the first tapeout would occur, again, I shouldn't be speaking for our customers, but sometime in the next 18 to 24 months, we are going to expect to start seeing revenue stream from that.

Terence Whalen - Citigroup

Okay, terrific. Maybe if we bounced to the lighting business quickly Ron, how do you think about what is required for that business to really begin contributing more?

Ronald Black

I think we are at a beginning of a rather steep ramp in the lighting business. We have two primary customers in North America, one is GE and the other is Cooper, that have both licensed the technology. Cooper is in fact, if you go to the website, I think you will see that you are on a 26-city tour in the U.S., really rolling out in mass, all of their next generation lighting. What I can tell all of it, is based around how the technology went to light fair, if you did, you went through their boot. All of the technologies, that 10 or 15 lights that they showed, were all based on our technology.

The model that we have with them is a licensing model, as the primary benefit to this classic technologies and the 2% to 3% royalty range depending on the customer, and as they ramp their revenue, you can look at that as just a singular revenue stream, essentially an annuity based on how much they ship.

We have other engagements in that, so we have a different business to do with them and with other customers to jumpstart them we provide -- in the same way that the semiconductor guys provide the core, that somebody integrates, we provide all the prototypes and low volume production to get them up and do manufacturing, to make 5,000 or 50,000 pieces of this injection molded plastic we provided to them. To make $50 million, they have to go offshore and do that themselves, but we give them all of the technology and the tooling and the designs, and they know how to do that, provide some engineering support and they compensate us for that.

So that's starting now, we did our initial shipments starting last quarter and it's ramping this quarter, and will continue, and then we are just looking to expand more globally with that space. So it could be a very rich business for us, but it's going to take time. But in general lighting industry, for them they are moving very-very quickly, coming from the semiconductor space, it's slow. So it takes time.

Terence Whalen - Citigroup

Okay great. May be switching gears a little bit and talking a little bit about the memory interface division. As we are building our model, we are interested in understanding what portions of revenue are fixed and which are variable. Can you just remind us, Satish, how to think about that and how to think about the customer revenue across the overall revenue base?

Satish Rishi

Sure. Last quarter, about 35% of our revenue was fixed, and by fixed, what I mean is that we get, in the middle of the quarter, the beginning of the quarter, or the end of the quarter, we get (inaudible), that's coming in, irrespective what the revenue of the customer is. The balance is, I won't call it variable, I'd say scalable with the customer's revenue, because variable gives a connotation, could be anywhere from zero to X, and it never gets to zero, it's always some base line plus, minus 5% to 10%. So our largest scalable revenue is with Samsung, and Samsung also is the largest customer; and when we signed them back in 2010, they were paying us $25 million a quarter, and that's approximately what it is. But it's based on their -- it's based on their arrears, based on their DRAM (inaudible) a couple of quarters ago. So we have some variability based on their overall revenue, not the mix, just overall revenue.

So the variable portion -- we can guess what it is, when we give our guidance. We typically know about 90% of our revenue is [not with] some amount of certainty. So we have a fairly -- from my perspective, a riskless prediction of our revenue, more like clockwork coming in on an ongoing basis. And we have licensed about 80% of the DRAM manufacturers, as Ron mentioned, Micron and now they are the only ones who have not licensed.

And on the SOC side, for the memory, where as the memory controller companies that use our technology to (inaudible). About half of them, or 50%, and have got 50% more to go.

Terence Whalen - Citigroup

Okay. In terms of Rambus Laboratory, can you also maybe touch upon what's a -- little bit longer term growth opportunities outside of the cryptography and lighting businesses?

Ronald Black

Sure. So we have a very small labs function. It's really focused on looking about three to five years out. Some of it from a patent standpoint, we look a little bit further out in the core businesses. We are particularly interested today in computational imaging. And computational imaging is the class of technologies where you are taking an image, and you are doing a lot of post-image captured processing to that image to be able to add additional value to what's there. And there is really two themes; one, which we announced is binary pixel, and that's a class of technologies that allow you to use standard image captures, the normal cameras in the cell phone, and get a much wider dynamic range. So if you are like me and you go and you take your family on holiday, and you are taking a picture of the sunset, you have this beautiful colored picture of the sunset, and then you have the black outline of your family, because you don't have the dynamic range.

So the way handsets, and even single-lens reflex cameras do today, is that they take three simultaneous pictures and they much them together. So if you are on a tripod, that's great. Unfortunately, if you're not on a tripod and there's any motion, which -- there always is with me, you tend to have ghosting and not the highest quality.

So the architecture that we have designed, it can run on the standard bit cells is nothing different than our pixels, I mean, standard processing. You can have some advancements to it that we have as well. But we actually -- you can think about it as the charge is being built up in these pixels, we drain it off when its maximized, and we kind of put a little counter. Okay, this pixel has one, then it has gone twice, then you do two, then three. So without having to take multiple pictures, we actually through the architecture, and some processing, we actually give you a higher dynamic range. It's absolutely brilliant. We have got a lot of interesting parties that are actually in the middle of discussing with us, from handset manufacturers to the actual technology, the image sensor providers, and we are looking at that as kind of the next phase.

In a similar but different vein, we have done some papers and we will be announcing in a more broad way in the coming months, is a lensless imager. And in this particular case, instead of using traditional objects which tends to be large and volcanic expensive, or relatively expensive. We actually use a diffraction gradings on top of the standard imagers, so it’s the actual diffraction, so it's essentially nothing. It's very-very flat. It's the diffraction and some post-processing that allows you to reassemble what the image would look like.

So in this particular case, if you took a picture of your face, I mean, you would know it, your grandmother would know it's you, your kids would know it's you, but if somebody said well, who is this, and they picked it out of a list to be a little bit hard. On the other hand, to know that it's a face, to know that the face is doing it, it's more in a sensor function, it's fantastic; and because it's very thin and very small and very inexpensive, the disposable is opening up areas like medical imaging. Things that we work in, new segments, new opportunities, it's kind of the class of internet of things. So as we are looking out to the internet of things, and in the sensors and putting these, one of the areas we are looking at is, a occupancy sensor for our lightbulbs. So the lightbulbs that we produce, if you have an LED lightbulb that can be in the field for 10 or 20 years, you might as well put an inexpensive sensor, and the sensor can say, yeah, somebody is in the room, turn it on, turn it off, or you can do similar ones where that also does infrared. So you can have a very interesting infrared sensor.

So computational imaging is probably the next big thing for us.

Terence Whalen - Citigroup

Okay. That's very helpful. It sounds like you are sort of balancing out the memory interface phase business with these newer technologies, that perhaps have growth trajectories that aren't entirely predictable. How do you manage that uncertainty, and how do you sort of prioritize what you are selling in terms of growth drivers?

Ronald Black

We have a rather rigorous process that Satish and I put in place, as I came to the company, where we maniacally focus on shareholder value. Each of the business unit manager understands the value, understands the multiples, understands how it's going to drive it, and any project that doesn’t do that, we don’t do it. So we looked at an acquisition recently, it wasn’t accretive, and within years we stopped looking at it. It’s not an option. No matter how the bright shiny object, no matter how good it is, but if it's not going to drive shareholder value, we don’t.

So, I think it's just more rigorous process. One thing I would say though is, I know it sounds like the Memory and Interface Division is kind of getting towards -- we have licensed everything and technically speaking on the DRAM side, if we are successful with Micron, which we are cautiously optimistic we will. We will have licensed the industry.

On the other hand I think that just the starting point. There is a lot of things that are evolving in the memory space and we can talk about those if you want to. But I think adding some intelligence to memory could be particularly interesting. There is a lot of more interest in generating buffers and buffer technology as the bit cells are getting smaller and smaller, and not as stable. So traditionally, the controller aspect on DRAMs is not as important as in say the non-volatile space. I think there is a lot of room for growth and Kevin who runs that business, he knows that even if he has a 100% market share, his goal is 120%. So, I think he has a few ideas to grow that business irrespective of how much we have.

Terence Whalen - Citigroup

So maybe if you can elaborate on memory controller licensing in particular, I believe you said you are at 50%, why is that further below where you are with the actual memory providers and how do you see that developing over the next couple of years.

Satish Rishi

The company’s initial focus was on the DRAM side, and obviously the technology something which was -- we need to have it in the memory controller side of the memory, to make it really work and work effectively. Traditionally, the memory controllers have been about a generation or generation and a half behind the DRAM industry, in terms of adoption of technology. So with DRAM, you are almost looking at the cusp of DDR4, I think, is where the memory controller is. So not even adoption of DDR3 is that widespread, you have some that are DDR3. But still, the bread and the butter is on the DDR2 side. So I think from that perspective, we are much farther ahead on the technology curve than memory controllers need to be. So again, using more [trading] technology.

Second part is that, unlike the DRAM industry where you have three, four, five big players, the memory controller market is very fragmented. We have very large SOC companies, that may have revenues in terms of billions, but they may only have may be a couple of $2 billion that is really the two memory controllers. So we have to go up against very large companies and it is a very fragmented market. So it takes lot more effort and time to convince them and ensure them we are using the technology. So it just (inaudible). We did undertake some litigation and all that is behind us now, and we settled with almost everybody who we are in litigation with. That’s not a desired path. We'd like to continue convincing them and ensuring how they are using our technology. And then, partner with us, where we can make the parts better.

Terence Whalen - Citigroup

And I think one of the more recent one has been SCMI growth, that you had sort of a settlement and extension with? If you don’t mind just kind of giving us an understanding of where you are working with them?

Satish Rishi

Sure. Ron, you want to talk about the SOI technology?

Ronald Black

Well, they have a silicon-on-insulator technology, which allows you to do very high speed designs and there are some mutual customers that is beneficial. We develop some technology with. So some people thought that was confusing. We didn’t take a license to their patents, right. They just provided us access to the technology to help us to design the models. So that we are working with them on that front. They are also big user of the differential power analysis counter measures, but they have a smartcard chip business and they have the set-top box business. So they are expanding on that front.

They do use our controller technology. It is rather small, as Satish described. In fact, we thought it was bigger, kind of where we (inaudible) learning when we became very open and the adoption rate was not as high as we thought. But we are continuing to develop on that front and they are a licensee of all of our patents.

Terence Whalen – Citigroup

Okay.

Ronald Black

So we are consciously optimistic that there is some really interesting work to do with them as they start to deploy both the DPI technology, right, and some of the other things that we are working on.

Terence Whalen - Citigroup

Okay great. I just wanted to check if we have any questions from the audience for either Ron or Satish?

Question-and-Answer Session

Can you step back 50,000 (inaudible) describe the value that you are offering to potential customers, because when you talk about Samsung or Micron or any of these really large companies that they have thousands of engineers, maybe tens of thousands of engineers. What is that you are doing, you are looking at? How you identify areas that can add value and you can get paid for?

Ronald Black

It’s a very good question. So in all of the areas -- and I can say this without pride on myself because I didn’t do it, it was the people before me that were leading the company. They had a maniacal focus on particular areas and as a knowledge worker business, it really doesn’t matter how many people you have. I kind of learned this the hard way of developing semiconductor devices. Sometimes five really smart people driving 50 people, is a lot better than a 1,000 people that are really mediocre. And I don’t mean that in a negative way, it's just the way it is. And what this company has done in these selected areas is focus and think very-very deeply.

I have a PhD in Engineering, most of these people have PhDs. They know more about the subject than anybody, and as a consequence, take the DDR4 technology that’s being rolled out next year. The fundamental seminal patents and technology in this our guys invented and patented 10 years ago. So we go out and this is kind of strange that we had such a bad name previously, we are kind of working fixing this.

We openly communicate how to manage the signal and power integrity problems. We produced papers. The papers I previewed as positive. We have great relationships with the engineering side of things. We provide a path to make this DRAM technology work and continue to work effectively, long before the industry even has the team to focus on it.

Having said that, we do signal and power integrity. We are not developing the process technology. We are not investing $5 billion in new CapEx. So there is value that they provide outside of it. But we do this. And so you can say the same thing, what does ARM really provide? Well, essentially everybody uses ARM microcontrollers, microprocessors and so now, everybody could do that. But they didn’t.

So think about us like that, and it makes a little bit more sense; and the same in all of the other areas.

Terence Whalen - Citigroup

Great. I think that bring us to the end of presentation. So, it’s been a pleasure to have Rambus. So Ron, very much appreciate your time.

Ronald Black

Thank you.

Terence Whalen – Citigroup

And Satish, it's very good to see you. Thank you.

Satish Rishi

Thanks.

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