The prolonged legal battle between technology licensing company Rambus Inc. (RMBS - Snapshot Report) and semiconductor company Micron Technology Inc. (MU - Analyst Report) has finally come to an end. Per the terms of the agreement between the two, Micron can use Rambus’ patented technology for its integrated circuit products for an initial period of seven years.
Rambus will receive royalty payments of up to $10.0 million a quarter, or $40 million over 12 months, totaling $280 million over the contract period. The deal also ends all earlier claims between Rambus and Micron.
Micron’s innovations in memory technologies, spanning DRAM, NAND and NOR Flash memory solutions, are being widely used in the latest mobile computing devices as well as in consumer, networking and embedded products.
The two companies were involved in lawsuits for patent infringements since Nov 2011. At that time, Rambus received an unfavorable ruling by a California jury in a long-drawn (almost 7 years) antitrust battle with Micron and Hynix Semiconductor Inc.
Micron and Hynix were accused of anti-trust charges, including a conspiracy to fix DRAM prices and prevent Rambus’ RDRAM memory technology from gaining traction in the market. However, considering the case a few months post trial, the jury negated the claims and cleared the defendants of all liabilities.
Now that all the issues are settled, the two tech companies will be able to save legal costs while adding to their net profits. Moreover, the joint effort could bring in more innovative technological solutions for end users.
Rambus’ patented technologies are of great importance to chipmakers for making advanced chips that are 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 - Analyst Report), Broadcom Corp. (BRCM - Analyst Report) and MediaTek Inc. for their respective integrated circuit products.
With the rising popularity of energy-efficient lighting, the in-vogue LED products are finding place in the latest architectural, retail, commercial and residential lighting fixtures. We find Rambus in a favorable position to capitalize on this opportunity.
Currently, Rambus has a Zacks Rank #3 (Hold)