Release Date: April 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: With the product revenue expected to increase about 9% sequentially. Is that an indication of the market turning more positive specific to register clock driver sales? And then maybe you can parse out some distinction between DDR4 and DDR5 and then related to the companion chip sales maybe you can share with us your latest view on the timing of ramp for those companionships?
A: (Luc Seraphin - Rambus Inc. - CEO, President & Director) Yes, we are pleased with the execution for the first half of this year. We had solid results in Q1, and we expect growth into Q2. We still see for the fourth quarter in a row, a slight decline of DDR4 inventories, which is a good sign. Our predominant sales continue to be DDR5 into the first half. But what we see going into the second half of the year is that we expect a modest recovery in DDR4 following the inventory digestion. We also expect a recovery in a standard server demand with a refresh cycle coming on board. And we will start to see more contribution from our companionships. The two companionships that we already had sampled to customers in prior quarters, but also now with our newly introduced PMIC. So we do see growth in the second half based on these 3 main factors.
Q: You mentioned in your prepared remarks that you're on track for your fiscal year '24 targets. Refresh my memory. Is that $120 million in annual sales in that business? And maybe if you can give us a sense of how that business seems to be performing better than expectations? Is it driven by the memory and high-speed SerDes controller IP? Or is it driven by more sort of the security side of the business?
A: (Desmond Lynch - Rambus Inc. - Senior VP of Finance & CFO) We're very pleased with our performance in silicon IP. If you take our adjusted number for last year, which excludes the PHY divestiture. This was about $110 million. And what we've talked is growing the business at 10% to 15%, in line with our long-term targeted growth rate. What we've seen in the first half of the year, if you take our Q1 actuals and plus the midpoint of our guidance that we will be up double digits in the silicon IP revenue, which is really driven really across all components of our portfolio. We're seeing strong performance by our security revenue really led by Root of Trust and MACsec solutions. And also on the interface side, we're also seeing really nice growth across HBM, CXL and PCIe.
Q: Two follow-ups from my end. Just double clicking on silicon IP. It's been kind of flattish into the Q2. Should we expect additional incremental revenues so that you would have a growth on a Q-over-Q into the second half?
A: (Desmond Lynch - Rambus Inc. - Senior VP of Finance & CFO) That's a good question. As I mentioned, just to Gary, a minute ago, we are performing -- we saw a sort of 10% growth if you take the first half of 2024 and compare that against 2023. We're performing very well. I think Luc gave some really nice color on some of the drivers we're seeing on the growth. And we do expect that, that will continue to grow into the back half of the year given our expanded sort of offering that Luc talked about, we're seeing really nice traction on the controller side as well as the security side. So we do expect to see sequential growth on our silicon IP business as we move throughout the year.
Q: Congratulations on the solid results. Just on -- as we're coming into the second half of the year, as you've mentioned, there's a product refresh and -- can you give us an idea of the mix that you're expecting to ship of DDR5 RCDs that are Gen 1, 2 and 3?
A: (Luc Seraphin - Rambus Inc. - CEO, President & Director) Thanks, Kevin. That's a difficult question. We have actually three generations of DDR5 layering up. There are different stages of qualification and production with different customers. So it makes life a little more challenging in terms of managing the backlog and the inventory. But we do see DDR5 growing in earnest. Gen 1 is well in production. Gen 2 is ramping, and we're shipping parts for the preparation of Gen 3. And we are -- depending on the modules and depending on the customers, we have different stages of qualification and production. What we can say is, as we said earlier, DDR5 remains small for the first quarter -- DDR4 remains small for the first quarter. We expect some slight recovery in DDR4 starting in the second half. But we expect this to be having a long tail. The majority of our business will continue to be DDR5 across those generations of DDR5.
Q: My question -- one question for PMIC and the other one is on (inaudible). Can you provide us some reasons on why you may be (inaudible) companies -- and what's your [common market share growth] in PMIC and RDIMM?
A: (Luc Seraphin - Rambus Inc. - CEO, President & Director) Thank you, Nam. If I understood your question well, your question was why we're introducing PMIC against the incumbents and how we expect to grow share. So yes, let me give you a little bit of color regarding the announcement we just made on PMIC. As the workloads for traditional servers and AI service continue to increase, we believe that power management has become a critical component on the system performance of the DIMM. The -- as you know, the power management chip distributes power in a reliable manner to different power domains that sits on the R DIMMs, and R DIMMs is very, very dense. It's one of the most dense electronic systems that you can find and you have to deliver that power. And these power management chip must demonstrate efficiency, how much power you use for the power you deliver. Accuracy and stability because of the tolerances of the devices on these DIMMs. But also a good behavior when you ramp up or ramp down power. So it's a very complex chip. And we thought that at Rambus, this is going to become a core competency in the long run. We have invested in power management for a couple of years now. We're still growing the team and the investments in that area. We are capitalizing on our deep understanding of the DIMM at the system level, which I think is really, really important. And as you saw in the announcement, we talked about the extreme PMIC, which is the name specified by JEDEC. But the extreme PMIC is actually a PMIC that goes into the most challenging DIMMs in terms of speed and density. And we targeted that because this is
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
