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Rambus Inc. (RMBS)

Barclays Capital Global Technology, Media and Telecommunications Conference Call

May 23, 2012 11:15 am ET


Martin Scott - SVP and General Manager, New Business Group

Satish Rishi - CFO


C.J. Muse - Barclays Capital


C.J. Muse - Barclays Capital

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Well good morning. My name is C.J. Muse, semiconductor analyst. I am very pleased to have the Rambus team with us today. We have Martin Scott who is the SVP and General Manager of New Business Group. He will be presenting. We have roughly 25 minutes. I think we have slides maybe 15-20 and then after that we will have Satish Rishi, CFO join in for Q&A. And after that we have a breakout in room Liberty 3 and with that let me turn it over to Martin.

Martin Scott

Thank you very much. It’s a pleasure to be here this morning. We can add the first slide. I would like to remind you that we will be making statements that are protected by the Safe Harbor provision. You can refer to the details on that slide. For those of you that are a little bit less familiar with Rambus, a brief introduction, I think is in order. We continue to be a premier technology licensing provider. And we've decided over the last couple of years to divide into the traditional semiconductor business focus that some of you may know from Rambus’ past and the groups that I manage, which is the New Business Group, which will be the primary focus of our conversation this morning. Our 2011 customer licensing income is $318 million and you can see the breakdown between recurring and non-recurring revenues and for further detail and questions about that, I would refer you to Satish at the end of this presentation.

We were founded in 1990 by Mike (inaudible) Mike Farmwald from Stanford. Our headquarter is in Sunnyvale and we have grown to about 510 people worldwide. So, I think a brief introduction on what's going on in our semiconductor technology group is an order before I spend the majority of the time this morning talking to you about our two new businesses.

We continue to focus on leadership and industry-standard solutions in the memory space. Certainly, our story past is relatively well known for our contributions to high speed interface technology. We continue to make fundamental innovations in the space of low power, not just from mobility solutions, but for service solutions as well. We continue to work with our licensees and potential customers at the system level in order to realize the benefit of our innovations and the semiconductor group is diversifying as well. We have initiated some research and new classes of imaging, particularly those classes of imaging solutions that require computationally intrinsic solutions, as well as new bit cell technology in NAND Flash, which some of you may have seen last quarter as indicative of our Unity Semiconductor acquisition.

So let me switch gears and spend the majority of time this morning giving you a little bit more detail that you may have heard before about market drivers and what we are doing in our new businesses. So there are two big ideas that have driven these acquisitions and solutions and they both have to do with capitalizing on major technology disruptions and opportunities to provide innovative solutions to drive those markets forward. The two primary businesses we’ll talk about, our solid state lighting and next generation display activity is indicated on the left.

And the one that is represented by our cryptography research group which is focused on hardware security and in particular securing the ever increasing need for securing transactions and data in a cloud-based computing world. Let me start and spend some time going into some more detail about our lighting and display company. We made a small acquisition of Jeff Parker and a dozen engineers about two years ago. We began rebuilding and building a licensing business around that patent portfolio and technology solution portfolio what you see as a result of that two years of investment is a wide variety of capability that ranges from custom software design all the way to optical substrate and polymer processing.

Most of this activity is centralized outside of Cleveland in Brecksville Ohio where we have built rapid turnaround and prototyping capability. Some of you may recognize this as being a departure from some of Rambus' past. We have the ability to both custom design and actually build full solutions for our customer base in order to speed adoption of our technology and take the barrier for getting these new technologies into the market down. The primary IP position that we have and the solution that we provide has to do with managing light from ever increasing right point sources of LEDs.

We instantiate optical, nano and micro structures through a variety of polymer-processing techniques, either on a film or an injection molded plates. This technology was originally vetted and adopted in backlight unit technology for large panel LCD TVs and display as well as mobile devices and we are taking much of that technology, customizing it, updating it and continuing to invent that technology and moving into solid state lighting. I will talk a little bit later about some of our recent licensees and our progress in actually bringing products to market.

This slide is interesting in that it gives you an idea or the range of interactions we have with the market place. It shows on the left a relatively small amount of adoption of this technology in LED lighting. It's just beginning, we think it's the beginning of several decades of a transition of incorporating the benefits of solid state light sources in a variety of architectural, commercial and residential settings all the way to the right hand side of the slide where, for any of you that hold up your smartphone or look at monitors and flat thin tablets or TVs in the wall you will note that much of this technology is more mature in its level of adoption. That informs us as well as to how we interact with our potential customers and licensees and how we go about monetizing our IP. Where is the market opportunity, certainly in lighting and display arena, both of these areas we believe have opportunities well in excess of $100 billion at the brand level. One thing that's quite interesting in terms of leveraging our revenue growth potential in this business is our ability to license the value of our technology at the luminaire level, or at the LCD panel level. And you can do the math, but we believe this represents a very exciting opportunity for us moving forward.

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