) shares soared 10.46% in after-hours trading after it announced
a patent licensing agreement with South Korean memory chip-making
company SK Hynix. The deal puts an end to the decade-long legal
battle between the two.
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Hynix specializes in providing dynamic random access memory
(DRAM) chips and flash memory chips. Hynix chips are widely used
by technology giants such as Apple Inc., ASUSTEK, IBM Corp., Dell
Inc. and Hewlett-Packard Co. Innovative technology licensed from
Rambus will help the company deliver advanced chips to be used in
computer or electronic goods.
Per the terms of the agreement, Hynix will be allowed to use
Rambus' patented technology for its integrated circuit products
for five years. As a royalty payment, Rambus will receive $12.0
million per quarter throughout the contract period, which comes
to $240.0 million.
Rambus clarified that it has settled all earlier claims regarding
its patented innovations. Rambus and Hynix have been involved in
several patent infringement lawsuits since 2010.
Rambus' innovative patented technologies are of great importance
to chipmakers for making advanced chips to be 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.,
) and MediaTek Inc. for their respective integrated circuit
Though Rambus' technologies are getting popular, they often
attract infringement lawsuits. The company had its share of
success defeating tech big shot NVIDIA, but lost lawsuits against
Micron Technology Inc. and STMicroelectronics.
We believe that Rambus' growth story would remain intact, given
its ability to settle legal claims, growing exposure in the LED
arena and continuous deal wins.
Currently, Rambus has a Zacks Rank #3 (Hold).