Rambus Keeps MRDIMM At $600 Million But Sees A 'Shallower' Ramp
CEO Luc Seraphin cites one supporting platform and weaker memory economics as shipments of the new server module chip stay "very modest."
Rambus, which makes memory interface chips and licenses chip designs for data center and AI systems, still sizes its MRDIMM opportunity at $600 million in total, but CEO Luc Seraphin told analysts on the company's third-quarter earnings call Monday that the ramp will be "shallower, in our opinion, than the other generations of products." The company reported record product revenue of about $114 million, up 22% from a year earlier.
Why the MRDIMM ramp is slower
Asked by a Jefferies analyst what gives Rambus confidence of leading MRDIMM when a competitor designed for the first-generation platform, Seraphin pointed to how different this launch is. Only one platform supporting MRDIMM is going into the market, he said, and Rambus does not know what portion of servers will use it versus standard modules.
He said the ramp will be shallower "simply because all of the platforms are not ramping at the same time." Customers also have to adopt a new technology and "go through the initial stumbles."
Seraphin added a second drag he called memory despecking. Customers are not cutting the number of modules, he said, but they tend to lower each module's capacity, which he blamed on the economics of memory. Module counts are growing, and he said that explains the company's fourth-quarter growth.
Current MRDIMM volume is small. Seraphin called shipments "very modest," with the AMD platform just starting to ramp.
Core chips carry the growth
Rambus guided fourth-quarter product revenue to between $127 million and $133 million, which the CFO, Sumeet Gagneja, said is up 34% year over year at the midpoint. Seraphin said the new generation of RCDs, the memory module chips, make "the bulk" of that growth. Companion chips, which he said started the year at a low double-digit percentage of product revenue, are growing each quarter.
Third-quarter revenue was $218 million, up 22% from a year earlier and 5% from the prior quarter. Non-GAAP earnings, meaning adjusted earnings, came to $0.84 a share, up 35% year over year. Rambus completed a $100 million accelerated share repurchase and ended the quarter with $777 million in cash and marketable securities.
Demand into 2027
Seraphin said demand is strengthening into 2027 and visibility into backlog is better, though supply will stay tight. Lead times from suppliers are rising, and Rambus is using its balance sheet to build inventory, which rose $12 million in the quarter. Gagneja said it plans a similar build in the fourth quarter. Lead times to customers have not increased, Seraphin said.
On silicon IP, Gagneja said the business of about $130 million is growing 10% to 15%, and the company is heading toward the higher end of that range.
Rambus's fourth-quarter guidance puts adjusted earnings at $0.84 to $0.92 a share, with MRDIMM still a small contributor.
Sources
- Rambus (RMBS) Beats Q3 Earnings and Revenue Estimates — Yahoo Finance
- Rambus: Q3 Earnings Snapshot — Associated Press
- Rambus Non-GAAP EPS of $0.84 beats by $0.05, revenue of $218.3M beats by $5.3M (RMBS:NASDAQ) | Seeking Alpha — seekingalpha.com
- Rambus Inc. (RMBS) Stock Price, News, Quote & History - Yahoo Finance — Yahoo Finance
