Chip Firm Rambus Is Working With an Adviser to Pursue a Sale

  • Consolidation in semiconductor industry has slowed this year
  • Rambus now sells branded chips, shares down 20 percent in 2017

Rambus Inc., a chip designer with a lengthy history of patent litigation, is considering a sale even as it has expanded its business to include sales of its own branded chips, people familiar with the matter said.

The Sunnyvale, California-based company is working with a financial adviser to evaluate sale options and seek potential suitors, the people said, asking not to be identified because the discussions are private. No final decision has been made and the company may choose not to pursue a sale, they said.

A representative for Rambus declined to comment.

Rambus jumped as much as 15 percent Friday, the most since Dec. 10, 2013, when it settled a licensing dispute with chipmaker Micron Technology Inc. The shares, after a brief suspension in trading, were up 9.3 percent to $12.38 at 3:40 p.m. in New York.

Consolidation in the semiconductor industry has slowed since chipmakers spent a record $113 billion on acquisitions in 2015. While 15 deals valued at more than $1 billion were announced in 2016, just three deals of that size have been announced this year, according to data compiled by Bloomberg.

Shares in Rambus, with a market value of $1.4 billion, have fallen about 20 percent this year, underperforming the Philadelphia Semiconductor Index. The index, composed of 30 chip-related companies, is up 16 percent this year.

The company, which owns more than 2,500 patents, has battled in court with many of the largest-makers of computer-memory chips, arguing that its patents cover some of the fundamentals essential to the design of the components. It began restructuring in 2015, and has since expanded beyond its semiconductor design and licensing business to start selling its own branded chips made by a supplier.

Data Centers, Mobile

The new products are part of Rambus’s push for a larger footprint in chips for data centers and mobile devices. The company has also grown its cyber security division.

In February, JPMorgan Chase & Co. analyst Paul Coster said the R&D initiatives launched by the company could “disrupt the data center industry,” and that success in one or more of these initiatives could make Rambus of interest to a buyer.

Rambus announced a broad licensing agreement in March with Western Digital Corp. that covers the use of Rambus patented memory technologies in Western Digital products through 2021.

The company’s efforts to dominate broad swathes of the chip industry with its technology relied on litigation for most of the past two decades, including court fights with Micron and other chipmakers.

The company’s prospects may have peaked in the late 1990s when Intel Corp. sought to have Rambus designs adopted as an industry standard for main memory. When other companies refused to fall in line, Intel backed down and Rambus’s technology became marginalized.

— With assistance by Joel Rosenblatt

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