Chips now drive Rambus's growth, but they earn a thinner gross margin than the company as a whole and tie up inventory. Can that growth keep the cash strength that built the company?
When you ask an AI assistant a question, a server in a data center probably pulls information from its memory over and over. Rambus works on that handoff. It sells small chips that sit on memory modules (the sticks of memory inside servers and PCs) and keep data moving in step. It also licenses its memory patents and sells chip designs, called silicon IP, that customers build into their own chips. Companies pay Rambus for all three: chips, patents and designs.
Chips are now the largest line. Other companies pay royalties, fees for the right to use its patents, and chipmakers pay for its designs. Royalties come from inventions already made, so nothing has to be built or stored to earn them. Chips are made by outside factories and held as until sold. Management puts product (what is left of product revenue after the cost of the products sold) at 60% to 63%, against 78% for the whole company in the third quarter of 2026. In our reading, a bigger share of chips can pull that company-wide figure down even when chip margins hold steady. What remains after that depends on spreading research and running costs over more revenue. Money the business does not need sits in $111 million of cash and $666 million of highly rated bonds and similar securities at the end of September, with strict caps on how much can go to any single borrower other than the U.S. government.
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