Rambus Buys Unity Semiconductor - Analyst Blog

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Rambus Inc. ( RMBS ) lately announced the acquisition of privately held memory technology provider Unity Semiconductor Corp., for a cash consideration of $35.0 million. The acquisition would support Rambus in beefing up its licensing business.

California-based Unity Semiconductor licenses its technology and production know-how to memory semiconductor companies. The company has also pioneered a technology for developing non-volatile memory in a scalable manner. The technology, CMOx, is expected to gain popularity among semiconductor companies, since memory chips manufactured with this technology will be faster, will lower manufacturing costs and increase data reliability, outshining the benefits of NAND technology.

Post-integration, the existing staff of Unity Semiconductor will continue to develop the unique solution with the help of Rambus' expertise. With the advent of CMOx technology, Rambus will have an additional technology within the licensing portfolio.

Higher volume of data storage, retrieval and transfer are the reasons for the growing demand of flash memory nowadays. U.S. market research firm Gartner expects the flash memory market to witness double-digit growth by 2015 based on the increasing sales of tablets, laptops and smartphones. The firm also predicts overall growth in the semiconductor industry by 2015.

Hence, we believe that Rambus, well equipped with the new memory technology, will be able to grab a huge share of the growing market for flash memory in electronic devices.

Rambus has been very efficient in enriching its semiconductor licensing portfolio. Earlier in May 2011, the company acquired Cryptography Research for $342.5 million. Cryptography's set of solutions complemented Rambus' semiconductor as well as lighting and display technologies.

To this point, Rambus has clinched deals with many semiconductor giants. The most recent being its tie-up with semiconductor giant Broadcom Inc. ( BRCM ), which is a well deserved achievement. We believe that the association with Broadcom will aid Rambus' fundamentals in the upcoming quarters. And success at Broadcom could fetch similar deals from the semiconductor industry.

Though Rambus' growth prospects are imminent, we remain on the sidelines given the Fed's decision to declare three of its patents invalid. This would reduce its growth to the extent that it is dependent on the three patents.

Currently, Rambus has a Zacks #3 Rank, indicating a short-term Hold rating.


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BRCM , RMBS

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