Rambus Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 30, 2023

There are 8 speakers on the call.

Operator

Welcome to

Speaker 1

the Rambus Third Quarter Fiscal Year 2023 Earnings Conference Call. Currently, all participants are in listen mode only. After the conclusion of our prepared remarks, we will conduct a question and answer session. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Desmond Lynch, Chief Financial Officer.

Speaker 1

You may begin your conference.

Operator

Thank you, operator, and welcome to the Rambus Third Quarter 2023 Results Conference Call. I am Desmond Lynch, Chief Financial Officer at Rambus and on the call with me today is Luke Serefin, our CEO. The press release For the results that we will be discussing today has been filed with the SEC on Form 8 ks. A replay of this call will be available for the next week at 866-813-9403. In addition, We are simultaneously webcasting this call and along with the audio, we are webcasting slides that we will reference during portions of today's call.

Operator

A replay of this call can be accessed on our website beginning today at 5 pm Pacific Time. Our discussions today will contain forward looking statements, including our expectations regarding projected financial results, Financial prospects, market growth, demand for our solutions, the company's ability to effectively manage supply chain shortages and other market challenges and the effects of ASC 606 on reported revenue amongst other items. These statements are subject to risks and uncertainties that may be discussed during this call and are more fully described in the documents we file with to SEC, including our 8 Ks, 10 Qs and 10 Ks. These forward looking statements may differ materially from our actual results, and we are under no obligation to update these statements. In an effort to provide greater clarity In the financials, we are using both GAAP and non GAAP financial presentations in both our press release and on this call.

Operator

A reconciliation of these non GAAP financials to the most directly comparable GAAP measures has been included in our press release, in our slide presentation and on our website atrampus.com on the Investor Relations page under Financial Releases. We adopted ASC 606 in 2018 using the modified retrospective method, which did not restate prior periods, but rather ran the cumulative effect of the adoption through retained earnings as a beginning balance sheet adjustment. Any comparison between our results under ASC 606 and prior results under ASC 605 is not an accurate way to track the company's progress. We will continue to provide operational metrics such as licensing billings to give our investors better insights into our operational performance. The order of our call today will be as follows: Luc will start with an overview of the business, I will discuss our financial results, and then we will end with Q and A.

Operator

I'll now turn the call over to Luc to provide an overview of the quarter. Luc?

Speaker 2

Thank you, Des, and good afternoon, everyone. We delivered another strong quarter with revenue and earnings above the midpoint of guidance As we continue to execute on our strategy and successfully navigate the complexities of the industry transition to DDR5 in a challenging macro environment. The company generated $52,000,000 in cash from operations, Enabling consistent return of value to our stockholders, most recently with the completion of a $100,000,000 accelerated share repurchase program. We also closed the sale of our FAI IP business, strengthening our focus on the development of differentiated chips and digital IP that expand our opportunities in the data center market. Generative AI and other data intensive workloads Continue to drive increasing requirements for memory performance and capacity across the computing landscape.

Speaker 2

This is a very positive long term trend for Rambus. Currently, the training of large language models is boosting the demand for AI servers with the most advanced multi core CPUs provisioned with DDR5 DIMMs to maximize main memory bandwidth alongside server GPUs with dedicated HBM memory. In addition, High performance general purpose servers enabled with DDR5 are seeing increasing demand to meet the growing computing Structural requirements of the AI data pipeline. This is creating tailwinds for the transition to DDR5. The higher memory attach rates and number of DIMMs to support both AI and the high end general computing servers enabled with DDR5 increases the opportunity for our expanding family of memory interface chips.

Speaker 2

As the industry builds out the infrastructure for the broadening adoption of AI, We look forward to continued innovation and growth in service CPUs as well as workload optimized accelerators. This trend also creates opportunities for our Silicon IP business. The ongoing specialization of computing systems Makes our high performance CXL, PCIe, HBM and GDDR IP controller cores increasingly critical. In addition, the move to application specific silicon driven by AI and other advanced workloads Creates increased vulnerabilities to attack as data is distributed across systems. This trend increases the need for advanced security IP, an area where we lead the industry.

Speaker 2

With that, AI is a strong catalyst for demand and a very positive long term growth driver for the company. As I mentioned last quarter, we are investing in initiatives to broaden our portfolio of offerings. Just last week, We announced our HVM-three memory controller IP is now supporting operations at 9.6 gigatransfers per second, which is 50% higher than current top end data rates. We are also working in close collaboration with the ecosystem and continue to make good progress on expanding our chip offering to support the ongoing evolution of high performance server and client systems for years to come. Turning now to our quarterly results.

Speaker 2

We continue to lead and invest in our areas of focus. In Q3, memory interface chips delivered strong results with quarterly product revenue above the midpoint of guidance at $52,000,000 We are executing well in a challenging environment with year to date results up 7% over the same period last year. As we have highlighted in past quarters, the industry transition to DDR5 continues to be dynamic. In Q3, we were very pleased to continue volume shipments of DDR5 solutions, which again are the predominant unit shipments this quarter. We continue to work with customers to manage through the ongoing DDR4 inventory correction.

Speaker 2

As we have said previously, we expect DDR4 headwinds to continue through the remainder of the year, in line with the broader ecosystem, but look forward to inventories normalizing in the early part of 2024. We remain positive on the outlook for DDR5 as we focus on execution and actively work with customers and partners through the transition. With the accelerated pace of DDR5 platform rollouts, we are poised to offer our customers and partners a range of solutions with multiple generations of our memory interface chips, shipping in volume, in qualification or sampling. In addition, Our close collaboration with the ecosystem continues on novel memory, advanced clocking and power management solutions to support the road map of future computing platforms, including developments for CXL attached memory, which we look forward to demonstrating publicly later this year. In closing, this was a strong quarter for the company with solid results.

Speaker 2

While we navigate dynamic market conditions in the near term, Our focused execution and strategic investments position us well for long term profitable growth. As always, I'd like to thank our customers, partners and employees for their ongoing support. And with that, I'll turn the call over to Dave to discuss the quarterly financial results. Dave?

Operator

Thank you, Luke. I'd like to begin with a summary of our financial results for the Q3 on Slide 5. Once again, we delivered a strong quarter, and we are very pleased with the company's continued execution on our strategic initiatives to drive long term profitable growth. We delivered strong financial results with both revenue and earnings above our expectations. In Q3, we executed a $100,000,000 accelerated share repurchase program, which retired approximately 1.8 5,000,000 shares.

Operator

Our continued strong cash generation allows us to consistently return cash to shareholders. As Luke discussed, in Q3, we completed the divestiture of our Fi IP business, which will enable us to redeploy our investments into higher growth areas of products and digital IP. Let me walk you through our non GAAP income statement on Slide 6. Revenue for the Q3 was 105 $300,000 above our expectations, driven by higher product revenue in the quarter. 3rd quarter revenue included approximately $5,000,000 in revenue for the Fai IP business that we divested in early September.

Operator

Royalty revenue was $28,900,000 while licensing billings was $57,900,000 The difference between licensing billings and royalty revenue mainly relates to timing as we do not always recognize revenue in the same quarter as we bill our customers. Product revenue was $52,200,000 consisting primarily of memory interface chips. Contract and other revenue was $24,200,000 consisting predominantly of Silicon IP. As a reminder, only a portion of our Silicon IP revenue is reflected in contract and other revenue, and the remaining portion is reported in royalty revenue as well as in licensing billings. Total operating costs, including cost of goods sold for the quarter were $72,900,000 Operating expenses of $52,400,000 were in line with our expectations and down $3,500,000 versus Q2 as we continue to be disciplined in our expense management.

Operator

And we ended the quarter with a total headcount of 624, down from Q2, which is a result of the Fai IP divestiture. GAAP interest and other income for the Q3 was $2,300,000 This included $400,000 Of ASC 606 interest income related to the financing component of fixed fee licensing arrangements for which we have recognized revenue but not yet received payment. Excluding the financing interest income related to ASC 606, This would have been $1,900,000 of net interest income. Using an assumed flat tax rate of 24% for non GAAP Pretax income, non GAAP net income for the quarter was $26,400,000 Now let me turn to the balance sheet details on Slide 7. We ended the quarter with cash, cash Equivalents and marketable securities totaling $375,500,000 This is up from Q2 through a combination of continued strong cash generation from operations of $51,600,000 and the net proceeds from the Fi IP divestiture of $106,300,000 partly offset by the $100,000,000 Accelerated share repurchase program, which we completed in the quarter.

Operator

At the end of Q3, We have contract assets worth $67,700,000 which reflects the net present value of unbilled accounts receivable related to licensing agreements for which the company has no future performance obligations. We expect this number to continue to trend down as we bill and collect for these contracts. It is important to note that this metric does not represent the entire value of our existing licensing agreements. As at each renewal opportunity, we work to restructure our patent agreements in a manner that allows us to recognize revenue each quarter during the life of each agreement. 3rd quarter CapEx With $11,400,000 while depreciation expense was $7,000,000 We delivered $40,200,000 of free cash in the quarter.

Operator

Now let me turn to our guidance for the Q4 on Slide 8. As a reminder, the forward looking guidance reflects our current best estimates at this time. We continue to We monitor the macro environment and our actual results could differ materially from what I'm about to review. In addition to the financial outlook under ASC 606, we also provide information on licensing billings, which is an operational metric that reflects amounts invoiced to our licensing customers during the period, adjusted for certain differences. As we have reported historically, licensing billings closely correlates with what we had historically reported as royalty revenue under ASC 605.

Operator

As a reminder, in Q3, we divested our Fai IP business, which on a full quarter basis, the business has been breakeven at approximately $6,000,000 in revenue, offset with $6,000,000 in cost. Under ASC 606, we expect revenue for the 4th quarter to be between $117,000,000 $123,000,000 We expect royalty revenue to be between 40 $2,000,000 $48,000,000 and licensing billings between $56,000,000 $62,000,000 The quarterly increase in royalty revenue reflects the Samsung patent licensing extension that was signed last year, which will be recognized as a variable contract under ASC 606 on a go forward basis. We are pleased with our continued execution and progression on our memory interface chip business, and we are well positioned in the market to deliver long term profitable growth. As Luke mentioned earlier, the transition to DDR5 continues to be dynamic. While we are pleased with our execution on DDR5 shipments, we continue to be impacted by the DDR4 inventory digestion, which will continue through the remainder of the year.

Operator

We expect Q4 non GAAP total operating costs, which includes COGS, to be between $73,000,000 $69,000,000 We expect Q4 CapEx to be approximately $8,000,000 Under ASC 606, non GAAP operating results for the Q4 is expected to be between a profit of 44 and $54,000,000 For non GAAP interest and other income and expense, which excludes interest income related to ASC 606, we expect $2,000,000 of interest income. We expect the pro form a tax rate The 24% is higher than the statutory tax rate of 21%, primarily due to higher tax rates in our foreign jurisdictions. As a reminder, we pay approximately $20,000,000 of cash taxes each year, driven primarily by licensing agreements with our partners in Korea. We expect non GAAP taxes to be between an expense of $11,000,000 $13,000,000 in Q4. We expect Q4 share count to be 110,000,000 diluted shares outstanding.

Operator

Overall, we anticipate a non GAAP earnings per share range between $0.32 $0.39 for the quarter. Let me finish with a summary on Slide 9. I am pleased with our strong results and the team's ongoing execution in this challenging and unpredictable macroeconomic environment as we continue to make progress against our strategic initiatives. Our portfolio is well positioned to address growing opportunities in the data center fueled by AI. We continue to grow the business profitably with strong cash generation and a robust balance sheet, which has enabled consistent capital return to shareholders.

Operator

Before I open the call up to Q and A, I would like to thank our employees for their continued teamwork and execution. With that, I'll turn the call back to our operator to begin Q and A. Could we have our first question?

Speaker 1

Thank you. Our first question comes from Gary Mobley with Wells Fargo. Gary, your line is open. Thank you

Speaker 3

for taking my question. Sure. Thank you. I want to start out by Gaining an appreciation of the undercurrents in the product revenue between DDR4 and DDR5, Can you verify if your DDR5 DIM chipset sales grew sequentially in the 3rd quarter? And how low DDR4 related revenue may have trended for the quarter?

Speaker 3

And Contrast that against what you think would be a normalized quarterly shipment number for DDR4 that may eventually layer on top of the growth in DDR5.

Speaker 2

Hey, Gary, I'll take the answer. I think

Operator

Dave, sorry, I was going back. Sorry about that. Hey, Gary, thanks for the question. We've been very pleased with our execution in 2023. And as Luc mentioned in his prepared remarks, product revenue is up 7% on a year to date basis through Q3 In a market which is down double digits, so we've successfully navigated a dynamic environment by posting solid results, which will result in year over year share gains versus our competitors.

Operator

Looking at our product mix in Q3, The shipments were predominantly DDR5. And for the Q2 in a row, we shipped out minimal DDR4 products in the quarter. Really comparing Q3 versus Q2, DDR4 shipments were down, which was offset by modest growth in the DDR5 shipments from there. Going into Q4, we do expect to see a similar product mix with continued growth in DDR5 And minimal DDR4 shipments in the quarter as customers continue to take a conservative posture towards inventory management at year end. So overall, we've been very pleased with our execution in this sort of challenging environment, and we're really pleased to see the continuation of growth in DDR5 Shipment switch is positive for us.

Speaker 3

Okay. As a follow-up to the product Sales mix, I noticed that the product gross margin was well off of the strong performance you had in the second quarter Despite the higher mix of DDR5, maybe if you could just speak to why the negative variance relative to that long term view, What 60%, 65% or relative to the prior quarter? And maybe if you could just give us a sense of The different moving pieces there between DDR 45?

Operator

Yes, Gary, great question. We are very Pleased to how we continue to manage our product gross margins as a company. And if you look at our year to date product gross margins again through Q3, Our gross margins in the products are around 63%, which is in line with the midpoint of the communicated long term product gross margins 60% to 65%. If you look at specifically in Q3, our product gross margins were 63%, which were down from the high of 66% in Q2, mainly driven by ASP erosion as the DDR5 products So now shipping and volume production. The ASP erosion was anticipated and in line with our expectations.

Operator

And as a company, we will continue to be disciplined in our ASP management, and we'll continue to drive product cost savings to offset any ASP Again, with the similar product mix going into Q4, as I mentioned earlier, We would expect product gross margins to be relatively flat at the 63% in Q4, and we're very pleased at how that we've been able

Speaker 3

Thanks, Des.

Operator

Thanks, Gabby.

Speaker 1

Our next question is from Mehdi Hosseini with SIG. Your line is now open.

Speaker 4

Yes. Thanks for taking my question. Can you please provide us an update where we are with Companionship, I believe last time we were expecting Qualification with a high volume manufacturing by mid-twenty 24. And if that's correct, Can you give us an update? And I have a follow-up.

Speaker 2

Thanks, Mehdi. Yes, we're pleased with the investments we're making In our companionship rollout, we are actually currently shipping in small volumes our SPD hub and temperature sensor to the market. And as you say, we believe to have more contribution from these products towards the second half of twenty twenty four. We have also sampled our customers with our initial power management chips and the initial feedback from our customers is really, really good. And you should expect some announcement next quarter around these products.

Speaker 2

And again, I think they will contribute Our revenue starting in the second half of twenty twenty four and into 2025. And finally, although these are not companionships to the data center, we're also working with our customers on a set of client So we have a rollout of products. We're pleased with the progress. We started to ship the SPD hubs and temperature sensor. We sampled the PMIC, and we're working on the client's rollout of products.

Speaker 2

And all of these should start contributing substantially more substantially in the second half of twenty twenty four.

Speaker 4

Great. Thanks for the detail. And one follow-up for that. Your Q4 guide implies OpEx of $50,000,000 taking a midpoint. And what I want to better understand is, How should we think about the scaling of OpEx once the revenue starts to grow, Once DDR5 RC or buffer chip starts shipping, can you Manage the business with the $50,000,000 to $51,000,000 of OpEx as your scale revenue or would OpEx would need to increase?

Operator

Hi, Mehdi. Thanks for your question. I think as a company, we've done a very nice job in managing our expenses given the softer macroeconomic outlook. In Q3, our operating expenses were around $52,000,000 which were down from $58,000,000 in Q1, which shows a discipline and focus in managing our expenses. In Q4, you are right that our OpEx spend will come down roughly to $50,000,000 to $51,000,000 for the quarter.

Operator

What I would say is it was highlighted when we divested the Fi IP Business is that we talked about reinvesting some of the R and D back into product programs, which will drive revenue into 2025 and beyond. And Luke We talked about some of the client opportunities earlier. Looking at 2024 and what I would say From an R and D perspective, our spend historically has been around 23% to 25% of revenue, and I would expect to be within that In SG and A, we'll continue to be disciplined with inflationary type of increases here. And what you will see is some very nice leverage as we continue to grow this sort of top line. I think overall, we've managed our OpEx very well, which has really The right balance have been prudent to our short term expenses and also balancing the need to invest in the long term opportunities from there.

Operator

So That's how we see the OpEx playing out, Mehdi.

Speaker 4

Thank you.

Operator

Thanks.

Speaker 1

Our next question is from Kevin Cassidy with Rosenblatt Securities. Your line is now open.

Speaker 5

Yes. Thanks for taking my question and congratulations on the strong quarter. Just as we talk about the DDR5 And I think you had mentioned sampling or qualifying the next generation. Is there an opportunity you had mentioned about ASP erosion. With the next generation, does it is there a reset on ASP as you go to Gen 2, Gen 3 and so forth?

Operator

Hi, Kevin. Thanks for your question. What we see is that when we look ahead to the next Sort of generations of sort of DDR5 that we will see that, ASP reset with each generation. The generations of DDR5 are coming around quicker. They seem to be on a 12 months cadence just now compared to the sort of 24 months cadence under DDR4.

Operator

So that will offer the opportunity of an ASP reset from there. What I would say is that we've been very disciplined in our approach to sort of pricing, and we have a really good track record of producing Healthy product gross margins. And as I mentioned earlier, this year, we're going to execute our product gross margins to be around 62% to 63%, which is in line with the midpoint of our long term product gross margin range of 60% to 65%.

Speaker 5

Okay, great. And just on the HBM3 device That IP, are you recognizing revenue for that? Or did you recognize revenue in the September quarter? Or is it part of your December quarter guidance.

Speaker 2

HBM3 announcement we've made is an IP that we've just announced At the top end of speeds, 9.6 gigatransfers per second. So this is a product to come that will contribute to revenue in the It's not a product that has generated revenue this quarter or next quarter.

Speaker 5

Okay. I see. I wasn't sure if it was if you had a beta customer that already had developed it. Okay, great. Understood.

Speaker 5

Thank

Speaker 1

you. Thanks, Kevin. Our next question is from Nam Kim with Arete Research. Your line is now open.

Speaker 6

Okay. Thank you. I have two questions. 1, I think the market shift to DDR5 seems happening much faster than expected. Can you share your latest view on DDR5 crossover timing?

Speaker 6

And then second question, also demand for DDR5 Gen 2 is picking up recently. And also you mentioned that PMIC qualification on DDR5 Gen 2. Can you give us some color on how you can compare with existing big PMIC suppliers such as TI, Samsung, MPS, what's your selling point really here versus others? Thank you.

Speaker 2

Thank you for your questions. So we still see the crossover in the market to happen in the first half of twenty twenty four for We do see a slow burn of DDR4 inventory at our customer side, but it's still a slow burn. Obviously, as far as we are concerned, our shipment of DDR5 compared to DDR4 into the market has passed that crossover point as You have noticed in our Q2 and Q3 results, but the crossover point in the market doesn't happen in the first half of twenty twenty four. That's still our view. DDR5 Gen 2 is gaining some momentum.

Speaker 2

We are shipping some volumes to our customers as they build their system. We will go through the same Process and cadence as with the other generations, the people are going to pre build systems, settle those pre build systems to the market. We're going to go through the standard qualification process. And we still believe Gen 2 will start in earnest in the second half of 2024. That's for Gen 2.

Speaker 2

With respect to your question regarding PMIC, PMIC has been a challenge for the ecosystem in general in that first generation. This has explained some of the You know hiccups of the ramp of DDR5. We have built a team for PMIC some months ago and have worked on a solution. We have sampled the solutions to our customers and the feedback from our customers is very positive at this point in time. So I think the initial feedback is about the quality and robustness of the solution.

Speaker 2

Now of course, we have to go through the standard process of validating that solution into the market. And as I said earlier in the prepared remarks, We expect to hit the market towards the second half of twenty twenty four with that product, but we're actively working with customers as we speak. Okay. Thank you.

Speaker 1

Our next question is from Sidney Ho with Deutsche Bank. Your line is now open.

Speaker 7

Great. Thank you. It sounds like the timing of the DDR4 inventory digestion hasn't really changed much from a quarter ago. What gives you that confidence that timing It's not moving out. Any tangible data points you can share with us.

Speaker 7

And a follow-up to that is, if you look at 2024, Not looking for guidance here, but what should we think about the split between DDR4 and DDR5 in product revenue for the entire year?

Operator

Hi, Sydney. Thanks for your question. With regards to DDR4 inventory or Customers that did come down in the September quarter, which is the 2nd quarter in a row. We are encouraged to see that all customers saw an inventory Decline in the September quarter versus the June quarter from there. And really from our discussions with customers, we do expect inventory digestion It really is a sort of fluid situation just now, and we're really working with the customers on the timing of the Doctor.

Operator

IV reordering patterns, which we expect to take place across Q1 and Q2 next year. But our visibility is limited with regards to this just now, but we do expect that DDR4 will continue to have a long tail of demand from there. I think the second part of your sort of question was with regards to product revenue sort of growth and the timing of DDR4, DDR5 for next year. As a company, we only guide sort of 1 quarter at a time, which is prudent, especially given the macro uncertainty just now. We've been very pleased with our execution in 2023 And really assuming the midpoint of our guidance for Q4, our 2023 product revenue will be relatively at $226,000,000 which really provides a solid foundation for us to grow next year.

Operator

And it is important to put this Performance in context, because the market has declined double digits this year. And we do expect to grow market share in 2020 versus the competitors. As it relates to 2024, we do anticipate growth, which is in line with some of the industry research that's And we're excited about our competitive product offerings, which will be the continuation in growth of DDR5 platforms. We do anticipate the growth of recovery of DDR4. And as Luc mentioned, we expect to see the greater contribution from the companion chips in the second half of next year.

Operator

So overall, our products are very well positioned in the market. We do expect to grow faster than market next year and to see continued share gains in 2024.

Speaker 7

Okay. That's helpful. My follow-up question is, you guys touched upon this in the prepared remarks, but it sounds like you guys are very well positioned to benefit from AI. Can you help us summarize the different ways that you can benefit from that ramp, both from a product and licensing standpoint? I understand the memory licensing business is kind of fixed.

Speaker 7

So just want to make sure that I understand the opportunity. Thanks.

Speaker 2

Hi, Sidney. Yes, if you look at the 3 pillars of our business, and of course, our patent licensing Business is not affected by AI. On the product side, let's start with the buffer chips. AI servers do actually use some general purpose servers in the AI boxes. And typically, those general purpose servers have the high memory content and typically DDR5.

Speaker 2

So I think the impact of AI, especially this year, although the market was a bit depressed in total, The positive impact of AI has been to accelerate the demand for DDR5 modules. And this, I think explains partially The profile of our DDR4, DDR5 mix between Q1, Q2 and Q3 of this year. With respect to Our IP business, what we see with AI is that we see the emergence of Specialized compute nodes, disaggregated architectures, so all of these chips have to communicate between themselves. So, CXL and PCIe IP become very, very important for our silicon customers as they build these heterogeneous Chips that go into the new architectures, GDDR and HBM, of course, that's why we announced our next generation HBM at very, very high speed. We want to stay ahead of the curve there.

Speaker 2

And finally, as we mentioned in the prepared remarks, with all of these specialized chips now in the data center, The vulnerability with respect to attacks on data at rest or actually data in motion between chips is becoming more important. And therefore our security IP portfolio is becoming more relevant to the market. So as we sold our PHY business to Cadence, we said we would We'll continue to invest in our IP portfolio because we do see the opportunity brought by AI with all the semiconductor companies that actually build chips for that market.

Speaker 7

Great. Thank you very much.

Speaker 1

Our next question is from Mehdi Hosseini with SIG. Your line is now open.

Speaker 4

Yes. Just a quick clarification. Look, I just want to go back to your prior statement. And this comes up every earning conference call. Would it be fair to say that Your product revenue is mostly driven by the number of DIMM per CPU and not necessarily with the BDR5 number of bits, in other words, your business is units of DIM Driven, not bits of DDR5.

Speaker 4

Would that be a fair statement?

Speaker 2

That's correct. There are several factors Going into the capacity equation, if you wish, one being the density of the memory itself. But the unit of commerce, as you rightfully say, for our buffer shape is really the number of gains.

Speaker 4

Yes. And then there are a number of new server CPUs coming out each with a different Number of channel per CPU and number of DIMM per channel. And in that context, it will take a little bit of time for The end customer to come up with the set of with the configuration of what really could meet their demand. And this is why as we go Through this transition, that inflection point is going to come down to when the CPU is going to be available and how And customer going to configure the system based on the CPU and number of DIMMs per CPU. Fair?

Speaker 2

That's correct. The volume of buffer chip depends on the number of DIMMs. Therefore, it depends on the number of channels and the number of DIMMs per channel. And all of those deployments depend on the end customers. But this being said, the trend is really for capacity expansion.

Speaker 2

So there's This trend in the market that people are trying to populate as many channels as they can and put as many DIMMs per channel as they can because we still have to fill that gap between the compute power from the servers and the memory capacity and memory bandwidth supporting that. So the trend is definitely towards higher volume. The way it's being deployed in terms of when the number of channels are populated and how many DIMMs per channel are being used It depends on the specific customers.

Speaker 4

Great. Thank you.

Speaker 1

There are no further questions. That concludes the question and answer session. I would now like to turn the conference over to the company.

Speaker 2

Thank you. I would like to thank you all for your time and your interest, and we'll talk to you later. Bye bye. That concludes the conference call.

Speaker 1

Thank you for your participation. You may now disconnect your line.

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Earnings Conference Call
Rambus Q3 2023
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