What changed in this filing

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Item 1. Business

2021-02-26 compared with 2020-02-26 · 65 added, 49 removed, 94 unchanged (55% of the section changed)

Rambus is a premier Silicon IP and Chip provider, delivering high-speed interface and embedded security solutions to make data faster and safer.

With 30 years of innovation, we also continue to develop and license the foundational technology essential to all modern system on chips (SoCs) and computing systems.

The Company delivers a broad range of semiconductor solutions including architecture licenses, high-speed physical and digital controller interface IP cores, Security IP cores and protocols, and memory interface Chips.

Our strategic objectives are to focus our product portfolio and research around our core strength in semiconductor technologies, optimize the Company for operational efficiency, and leverage our strong cash generation to re-invest for growth.

Rambus produces products and innovations that address the fundamental challenges of accelerating data.

We make industry-leading chips and IP that enable critical performance improvements for data center and other growing markets.

The ongoing shift to the cloud, along with the widespread advancement of artificial intelligence (“AI”) across the data center, 5G, automotive and Internet of Things (“IoT”), has led to exponential growth in data usage and tremendous demands on data infrastructure.

Creating fast and safe connections, both in and across systems, remains one of the most mission-critical design challenges limiting performance in advanced hardware for these markets.

As an industry pioneer with over 30 years of advanced semiconductor design experience, Rambus is ideally positioned to address the challenges of moving and protecting data.

We are a leader in high-performance memory subsystems, providing chips, IP and innovations that maximize the performance and security in data-intensive systems.

Whether in the cloud, at the edge or in your hand, real-time and immersive applications depend on data throughput and integrity.

Rambus products and innovations deliver the increased bandwidth, capacity and security required to meet the world’s data needs and drive ever-greater end-user experiences.

Our strategic objectives are focusing our product portfolio and research around our core strength in semiconductors, optimizing our operational efficiency, and leveraging our strong cash generation to re-invest for growth.

We continue to maximize synergies across our businesses and customer base, leveraging the significant overlap in our ecosystem of customers, partners and influencers.

By delivering comprehensive solutions for secure, connected semiconductors, we bring better value to our customers and improved profitability for the Company.

In 2019, we redefined our perimeter through the successful divestiture of our Payments and Ticketing businesses, which allowed us to focus the Company on providing leading solutions for the semiconductor market thus becoming a single reportable segment.

The Rambus product and technology roadmap, as well as our go-to-market strategy, is driven by the application-specific requirements of our focus markets.

This not only allows us to better serve our traditional data center and communications markets, but also to expand into new, fast-growing markets that demand the highest levels of performance and security, including automotive, artificial intelligence (AI), Internet of Things (IoT) and government.

We demonstrated continued execution and success across our product lines throughout the past year, with combined annual revenue from our Memory Interface Chips and Silicon IP businesses up 64% year over year to $114.5 million.

Memory Interface Chips was the fastest growing portion of the business with revenue almost doubling year over year, and Silicon IP drove sustained revenue growth with multiple design wins at tier-1 SoC customers across our target markets.

Patent Licensing remains stable following the structural step down in 2019, with the decline offset by growth in product revenue.

Revenue from products accounted for 33%, 17%, and 9% of our consolidated revenue for the years ended December 31, 2019, 2018 and 2017, respectively.

2020 was an unprecedented year, with the onset of COVID-19 triggering uncertainty in the global marketplace.

Despite that turbulence, Rambus demonstrated great execution and significant product growth.

Continued commitment to our customers, careful supply management and the tremendous dedication and agility of the Rambus team worldwide drove this success.

Annual product revenue increased 56% year-over-year between 2019 and 2020.

Driven by continued gains in market share from our memory interface chips, we recognized record product revenue of $114.0 million in 2020.

Silicon IP achieved sustained revenue growth with design-win momentum at tier-1 system on chip (“SoC”) customers and strong execution from the businesses acquired in 2019.

Rambus successfully closed key patent licensing agreements with DRAM and SoC manufacturers, solidifying our foundation of sustained cash generation.

Memory Interface Chips

Made for high speed, reliability and power efficiency, our DDR memory interface Chips for registered, load-reduced and non-volatile dual in-line memory modules (RDIMM, LRDIMM and NVDIMM, respectively) deliver top-of-the-line performance and capacity to the next wave of enterprise and data center servers.

Made for high speed, reliability and power efficiency, our DDR memory interface chips for registered, load-reduced and non-volatile dual in-line memory modules (“RDIMM,” “LRDIMM” and “NVDIMM,” respectively) deliver top-of-the-line performance and capacity to the next wave of enterprise and cloud servers.

Rambus offers DDR5, DDR4 and DDR3 memory interface chips to enable increased memory capacity, while maintaining peak performance for data-intensive work loads.

We sell our memory interface chips directly and indirectly to module manufacturers and OEMs worldwide through multiple channels, including our direct sales force and distributors.

We sell our memory interface chips directly and indirectly to memory module manufacturers and OEMs worldwide through multiple channels, including our direct sales force and distributors.

We operate direct sales offices in the United States, Japan, Korea, Taiwan and China, where we employ sales personnel who serve our direct customers and manage our channel partners.

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Outsourcing also allows us the flexibility needed to respond to new market opportunities, simplifies our operations and significantly reduces our capital requirements.

Rambus’ Silicon IP business offers both Interface and Security IP solutions.

Rambus’ Silicon IP offers both Interface and Security IP solutions.

Our Interface IP solutions feature both high-speed memory and chip-to-chip interconnect technologies.

With the acquisition of Northwest Logic in August of 2019, Rambus now offers a complementary portfolio of physical interface (PHY) and companion digital controller IPs to create a one-stop-shop for SoC designers.

These silicon-proven solutions are critical to high performance data center, networking, AI, Machine

Learning (ML) and automotive applications because they enable and optimize the transfer of data between chips and electronic devices.

The chip-to-chip IP portfolio is comprised of industry-standard interface solutions including 28G, 32G, 56G and 112G SerDes, as well as the recently announced PCIe 5.0 offering.

Rambus’ leading-edge memory Interface solutions include HBM Gen2 and the world’s fastest, silicon-proven GDDR6 solution, capable of running at data rates up to 18 Gbps.

The Rambus Security IP solutions include secure cores, protocols and chip provisioning technologies.

Following the acquisition of the Secure Silicon IP and Protocols business from Verimatrix in December 2019, Rambus now offers the industry’s most comprehensive portfolio of silicon-proven Security IP and chip provisioning solutions.

With the growing threat environment, posed by malicious actors, we believe it is imperative to protect complex electronic systems at their silicon foundation with hardware-based security IP solutions, including crypto cores, hardware roots of trust, and high-speed protocol engines.

As a result, our hardware-based, embedded security solutions are mission-critical for data center, AI, networking, IoT, automotive and government applications.

In addition to augmenting the portfolio through acquisitions, Rambus organically expanded its family of fully-programmable root of trust cores to offer tailored configurations that address the specific security needs of our various target markets leading to design wins with tier-1 cloud and AI SoC providers.

With the acquisition of Northwest Logic, Inc.

(“Northwest Logic”) in August of 2019, Rambus now offers a complementary portfolio of physical interface (“PHY”) and companion digital controller

IPs to create a one-stop-shop for SoC designers.

These silicon-proven solutions are critical to high-performance data center, networking, AI, Machine Learning (“ML”) and automotive applications because they enable and optimize the transfer of data between chips and electronic devices.

The Rambus Security IP solutions include crypto cores, hardware roots of trust, high-speed protocol engines and chip provisioning technologies.

With the acquisition of the Secure Silicon IP and Protocols business from Verimatrix in December 2019, Rambus offers one of the industry’s most comprehensive portfolio of silicon-proven Security IP.

With the growing threat environment, hardware-based, embedded security solutions, are mission-critical for protecting data center, AI, networking, IoT, automotive and government applications.

Architecture Licenses

Rambus patented inventions are foundational to the semiconductor industry and licenses of our portfolio to our customers represent a significant portion of our revenue.

The Company is committed to continuing to innovate and invent, thereby advancing semiconductor technology.

Rambus is committed to continuing to innovate and invent, thereby advancing semiconductor technology.

With a broad worldwide portfolio of patents covering memory architecture, high-speed serial links, and security, we enhance our value and relevance in our target markets and create a platform for investment in product development.

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License agreements are structured with fixed or variable, or a hybrid of fixed and variable royalty payments over certain periods ranging up to ten years.

Leading consumer product, semiconductor and system companies such as AMD, Broadcom, Cisco, Freescale, Fujitsu, GE, IBM, Intel, Micron, Nanya, NVIDIA, Panasonic, Qualcomm, Renesas, Samsung, SK hynix, STMicroelectronics, Toshiba, Western Digital, Winbond and Xilinx have licensed our patents for use in their own products.

Leading semiconductor and electronic system companies such as AMD, Broadcom, Cisco, Fujitsu, IBM, Marvell, Mediatek, Micron, Nanya, NVIDIA, Panasonic, Phison, Qualcomm, Renesas, Samsung, SK hynix, Socionext, STMicroelectronics, Toshiba, Western Digital, Winbond, and Xilinx have licensed our patents for use in their own products.

The semiconductor industry is intensely competitive and is characterized by rapid technological change, short product life cycles, cyclical market patterns, price erosion, increasing foreign and domestic competition and market consolidation.

Rambus competes with product offerings from various companies depending upon the particular Rambus product line.

In the market for memory interface Chips, we compete with international semiconductor companies including IDT, now part of Renesas, and Montage Technology.

In the Silicon IP market, Rambus competes with the in-house design teams at our potential customers, as well as with third party IP suppliers such as Arm, Cadence and Synopsys.

In the market for memory interface chips, we compete with international semiconductor companies including Renesas and Montage Technology.

In the Silicon IP market, Rambus competes with the in-house design teams at our potential customers, as well as with third-party IP suppliers such as Cadence and Synopsys.

Many of our competitors are larger and have better access to financial, technical, sales and marketing resources than we possess.

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Even to the extent we determine that such alternative technologies infringe our patents, there can be no assurance that we would be able to negotiate agreements that would result in royalties being paid to us without litigation, which could be costly and the results of which would be uncertain.

As in the past, litigation may be required to enforce and protect our intellectual property rights, as well as the substantial investments undertaken to research and develop our innovations and technologies.

Research, Development and Employees

Building upon our foundation of core semiconductor technologies, we aligned our research priorities to focus on innovation and patent development in order to enhance the value of our patent portfolio and differentiate our product offerings in the market.

As in the past, litigation may be required to enforce and protect our IP rights, as well as the substantial investments undertaken to research and develop our innovations and technologies.

Research and Development

Building upon our foundation of core semiconductor technologies, our research priorities focus on innovation and patent development that enhance the value of our patent portfolio and differentiate our product offerings in the market.

Key to our efforts is continuing to hire and retain world-class inventors, scientists and engineers to lead the development and deployment of inventions and technology solutions for our intended markets.

To foster our research and development efforts, we assembled a team of highly skilled inventors, engineers and scientists whose activities are focused on continually developing new innovations within our chosen technology fields, and thereby securing the intellectual property rights and legal protections for these ground-breaking inventions.

To foster our research and development efforts, we assembled a team of highly-skilled inventors, engineers and scientists whose activities are focused on continually developing new innovations within our chosen technology fields, and thereby securing the IP rights and legal protections for these ground-breaking inventions.

Using this foundation of innovation, our technical teams develop new semiconductor solutions that enable increased performance, greater power efficiency and increased levels of security, as well as other improvements and benefits.

Our solution design and development process is a multi-disciplinary effort requiring expertise in multiple fields across all of our operational units.

As of December 31, 2019, we had approximately 480 employees in our engineering departments, representing approximately 70% of our total number of 685 employees.

None of our employees are covered by collective bargaining agreements.

As noted, we believe our future success is dependent on our continued ability to identify, attract, motivate and retain qualified personnel.

In order to attract qualified employees, we created a work environment and culture that encourages, fosters and supports research, development and innovation in breakthrough technologies with significant opportunities for broad industry adoption.

To date, we believe we have been successful in recruiting qualified employees and that we have a good relationship with our employees.

A significant number of our scientists and engineers spend all or a portion of their time on research and development.

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We expect to continue to invest substantial funds in research and development activities.

In addition, because our customer agreements often call for us to provide engineering support, a portion of our total engineering costs are allocated to the cost of contract and other revenue.

addition, because our customer agreements often call for us to provide engineering support, a portion of our total engineering costs are allocated to the cost of contract and other revenue.

Human Capital Resources

As of December 31, 2020, we had 623 employees, of which approximately 44% were in the United States and 56% in other global regions.

Additionally, approximately 67% of our employees were engineers with the remaining employees in sales, general and administrative positions.

None of our employees are covered by collective bargaining agreements.

Throughout the COVID-19 pandemic, our primary focus has been on the safety and well-being of our employees and their families.

Our global pandemic efforts include instituting a global employee assistance program while leveraging the advice and recommendations of infectious disease experts to establish proper safety standards.

As the pandemic continues, the health and well-being of our workforce remains our top priority while we ensure productivity for those employees working from home.

We believe that our future success largely depends upon our continued ability to identify, attract, motivate and retain qualified personnel.

We provide our employees with competitive compensation, as well as opportunities for equity ownership and developmental programs that enable continued learning and growth.

We also offer employees benefits such as life and health insurance, paid time off, paid parental leave, and retirement savings plans.

We utilize successful recruiting practices that yield qualified and dedicated employees who are driven to achieve our vision.

We are an equal opportunity employer and are committed to maintaining a diverse and inclusive work environment.

Our commitment to diversity and inclusion helps us attract and retain the best talent, enables employees to realize their full potential and drives high performance through innovation and collaboration.

Because we know that diversity is truly a competitive advantage that helps drive innovation, we strive to maintain a best-in-class work environment that fosters respect for individuals, their ideas and contributions.

We benefit from the innovation that results when people with differing experiences, perspectives and cultures work together to achieve a common goal.

Intellectual Property

We maintain and support an active program to protect our intellectual property, primarily through the filing of patent applications and the defense of issued patents against potential infringement.

We maintain and support an active program to protect our IP, primarily through the filing of patent applications and the defense of issued patents against potential infringement.

As of December 31, 2020, our technologies are covered by 2,407 U.S.

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We believe our patented innovations provide our customers with the legal rights and licenses to use our inventions to achieve improved performance, greater cost-effectiveness and other technological benefits in their own products and services.

We intend to continue our innovation efforts and allocate significant investment in our intellectual property development programs.

We intend to continue our innovation efforts and allocate significant investment in our IP development programs.

We have a program to file applications for and obtain patents in the United States and in selected foreign countries where we believe filing for such protection is appropriate and would further our overall business strategy and objectives.

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In addition, we attempt to protect our trade secrets and other proprietary information through agreements with current and prospective customers, and confidentiality agreements with employees and consultants and other security measures.

We also rely on copyright, trademarks and trade secret laws to protect our intellectual property and other proprietary assets.

We also rely on copyright, trademarks and trade secret laws to protect our IP and other proprietary assets.

Our sales of memory interface chips are generally made pursuant to short-term purchase orders.

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Therefore, we believe that purchase orders or backlog are not necessarily a reliable indicator of our future product sales.

Corporate and Other Information

Corporate and Available Information

was founded in 1990 and reincorporated in Delaware in March 1997.

Our principal executive offices are located at 1050 Enterprise Way, Suite 700, Sunnyvale, California.

Our principal executive offices are located at 4453 North First Street, Suite 100, San Jose, California.

Our website is www.rambus.com .

We have used, and intend to continue to use, our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

The inclusion of our website address in this report does not include or incorporate by reference into this report any information on our website.

You can obtain copies of our Forms 10-K, 10-Q, 8-K, and other filings with the SEC, and all amendments to these filings, free of charge, from our website as soon as reasonably practicable following our filing of any of these reports with the SEC.

In addition, you may read and copy any material we file with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Room 1580, Washington, D.C.

In addition, you may read and copy any material we file

with the SEC at the SEC’s Public Reference Room at 100 F Street NE, Room 1580, Washington, D.C.

You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

The SEC also maintains a website that contains reports, proxy, and information statements, and other information regarding registrants that file electronically with the SEC at www.sec.gov .

Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

Information concerning our revenue, results of operations and revenue by geographic area is set forth in Item 6, “Selected Financial Data,” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in Note 7, “Segments and Major Customers,” of Notes to Consolidated Financial Statements of this Form 10-K, all of which are incorporated herein by reference.

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There is no family relationship between any of our named executive officers.

Position and Business Experience

Name Age Position and Business Experience

Luc Seraphin 57 Mr.

Seraphin is President & Chief Executive Officer.

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Seraphin also holds an MBA from the University of Hartford and has completed the senior executive program of Columbia University.

Senior Vice President, Finance and Chief Financial Officer.

Rahul Mathur 47 Senior Vice President, Finance and Chief Financial Officer.

Mathur joined us in his current position in October 2016.

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from the Wharton School of Business at the University of Pennsylvania.

Senior Vice President, General Counsel and Secretary.

Kim has served as the senior vice president, general counsel and secretary since February 2013 and as our vice president, corporate legal since July 2010.

Jae Kim 50 Mr.

Kim has served as the senior vice president, general counsel and secretary from February 2013 until February 2021 and as our vice president, corporate legal since July 2010.

Prior to his tenure at Rambus, Mr.

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from the American University, Washington College of Law, and his bachelor’s degree from Boston University.

Senior Vice President, Chief Operating Office.

Sean Fan 55 Senior Vice President, Chief Operating Office.

Fan has served as the senior vice president, chief operating office since August 2019.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business