Rambus - Q4 2025
February 2, 2026
Transcript
Operator (participant)
Welcome to the Rambus fourth quarter and fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. At the conclusion of our prepared remarks, we will conduct a question-and-answer session. If you would like to ask a question, you may press star one on your touch-tone phone at any time. If anyone should require assistance during the conference, please press star zero at any time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Desmond Lynch, Chief Financial Officer. You may begin your conference.
Desmond Lynch (CFO)
Thank you, operator, and welcome to the Rambus fourth quarter and fiscal year 2025 results conference call. I am Desmond Lynch, Chief Financial Officer at Rambus, and on the call with me today is Luc Seraphin, our CEO. The press release for the results that we will be discussing today has been filed with the SEC on Form 8-K. We are webcasting this call along with the slides that we will reference during portions of today's call. A replay of this call can be accessed on our website beginning today at 5 P.M. Pacific Time. Our discussion today will contain forward-looking statements, including our expectations regarding projected financial results, financial prospects, market growth, demand for our solutions, other market factors, including reflections of the geopolitical and macroeconomic environment, and the effects of ASC 606 and 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 the 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. 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 at rambus.com on the Investor Relations page under Financial Releases. In addition, we will continue to provide operational metrics such as licensing billings to give our investors better insight 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&A. I'll now turn the call over to Luc to provide an overview of the quarter. Luc?
Luc Seraphin (CEO)
Thank you, Des. Good afternoon, everyone, and thank you for joining us. 2025 was an excellent year for Rambus. We closed with a strong Q4 and finished the full year with record revenue and earnings. Our financial success is a testament to both our strategy and execution as we continue to deliver products and technologies that accelerate memory, compute, and connectivity advancements in rapidly growing markets. Our diversified portfolio remains a core strength for the company, and each of our businesses contributed meaningfully to our results as we delivered a new annual high in cash from operations. This positions us well to continue to invest strategically in our product roadmap, expand our market opportunity, and drive long-term growth.
Before I go into detail on our business results, let me take a moment to discuss the important market and technology trends influencing our strategy and highlight several of our key accomplishments in 2025. Both AI and traditional server markets remained strong throughout the year, driven by the accelerating need for significantly higher compute and memory performance. As workloads become more complex and diverse and inference rapidly expands across applications, including agentic and physical AI, the demands placed on memory subsystems continue to intensify. This environment drove further adoption of DDR5, as well as other high-performance memory and interconnect technologies, where Rambus signal and power integrity expertise are foundational. The accelerated pace of innovation continued across the industry, with customers increasingly operating on one-year product cadences to stay ahead of demand for greater performance.
This dynamic amplified the need for cutting-edge merchant and custom solutions, where our advanced technology portfolio enables accelerated design cycles for our customers. Against this backdrop, Rambus had a number of achievements that fueled our performance in 2025 and strengthened our position across key markets as we move into 2026. We furthered our leadership in DDR5 with increased market share in RCDs, reflecting both the depth of our expertise and the continued trust of our customers. Our power management chips made meaningful progress with growing adoption of our DDR5 PMICs, contributing to revenue growth. We extended our reach in high performance and AI PCs through the introduction of our complete client chipset.... With this addition, Rambus offers a comprehensive chipset portfolio that supports all JEDEC standard DDR5 and LPDDR5 modules across server and client systems.
With that, we offer customers greater assurance of interoperability and reliable performance at scale. And finally, in addition to these chip milestones, we saw increasing design wins and customer engagement led by our latest generation, HBM4, GDDR7, and PCIe 7 digital IP, as well as our broad range of security IP to safeguard data transmission and storage. Turning now to our quarterly business results. Rambus capped off the year with a strong Q4 performance, delivering product revenue of $97 million. This brought us to a new annual record of $348 million, which was up 41% year-over-year. This achievement reflects our continued product leadership and ongoing market share gains in DDR5 RCDs. In addition, customer adoption of new products continues to progress with growing revenue contributions and volume shipments on the way.
For Silicon IP, we are strategically focused on delivering industry-leading solutions that empower the next wave of AI hardware. The increasing pace and diversity of AI chip designs, including custom silicon for hyperscalers, is driving design wins for high-speed memory, interconnect, and security IP. With market leadership and expertise across multiple generations of HBM, GDDR, and PCIe, as well as our best-in-class security solutions, our IP is a critical enabler of the performance required by AI workloads. We see strong traction across our portfolio of cutting-edge solutions. In particular, there's growing demand for our interface and security IP solutions as we see the increased need to move and secure data in scale-up and scale-out scenarios. Looking ahead, the ongoing expansion of AI and the transformation of the data center continues to reshape memory and interconnect requirements.
AI training and inference at scale are driving increased demand for bandwidth, capacity, and power-efficient performance. The expansion of agentic AI is catalyzing traditional CPU-based server demand and continues to drive the need for more DIMMs per system, higher speed interfaces, and sophisticated power management. Our product and IP sit at the core of this transition, enabling the massive compute infrastructure required for increasingly complex and diverse AI models. In addition, the rise of purpose-built systems and increasingly heterogeneous compute is accelerating the adoption of new memory architectures, higher data rates, and advanced security solutions. All of these trends play directly to Rambus' strength, open opportunities to broaden our leadership across next-generation platforms, and reinforce the long-term tailwinds for our businesses. Rambus is well positioned to capitalize on these trends, and in 2026, we expect to grow faster than market.
Now, as reflected in our Q1 outlook, we experienced a one-time supply chain issue that will affect product revenue for Q1. The issue is being resolved in collaboration with our supply chain partners, and we expect our product business to return to strong growth in the second quarter. Fueled by market share gains and the continued ramp of new products, I am confident in our long-term trajectory for 2026 and beyond. As always, I want to thank our customers, partners, and employees for their continued support. With that, I'll turn the call over to Des to walk through the financials. Des?
Desmond Lynch (CFO)
Thank you, Luc. I'd like to begin with a summary of our financial results for the fourth quarter and for the full year 2025 on Slide 3. We delivered strong financial results in both the fourth quarter and full year 2025 as we continue to execute on our long-term growth strategy. Full year revenue and earnings per share reached record levels, driven by a 41% increase in product revenue to $348 million due to DDR5 market share gains and new product contributions. In 2025, we generated a company record, $360 million in cash from operations, which was up 56% from 2024. An established track record of generating cash enables us to invest in initiatives that fuel our long-term growth. Let me now provide you a summary of our non-GAAP income statement on Slide 5.
Revenue for the fourth quarter was $190.2 million, which is above our expectations. Royalty revenue was $71.7 million, while licensing billings were $71.5 million. Product revenue was $96.8 million, as we delivered another quarter of record product revenue. This represents 32% year-over-year growth, driven by continued strength in DDR5 products and ramping new product contributions. For the full year, we delivered $347.8 million in product revenue, which was a new annual record for the company. Contract and other revenue was $21.8 million, 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 costs of goods sold for the quarter, were $103.2 million. Operating expenses of $64.9 million were in line with our expectations and flat compared to Q3. Interest and other income for the fourth quarter was $6.4 million. Using an assumed flat tax rate of 20% for non-GAAP pre-tax income, non-GAAP net income for the quarter was $74.7 million. Now let me turn to the balance sheet details on Slide 6. We ended the quarter with cash, cash equivalents, and marketable securities totaling $761.8 million, up from Q3, primarily driven by record cash from operations of $99.8 million. Fourth quarter capital expenditures were $8.6 million, while depreciation expense was $8.4 million.
Free cash flow in the quarter was $91.2 million, and for the full year, we delivered $320.9 million or 45% free cash flow margin. Let me now review our non-GAAP outlook for the first quarter on Slide 7. As a reminder, the forward-looking guidance reflects our best estimates at this time, and our actual results could differ materially from what I'm about to review. In addition to the non-GAAP 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. We expect revenue in the first quarter to be between $172 million and $178 million.
We expect royalty revenue to be between $61 million and $67 million and licensing billings between $66 million and $72 million. As Luc mentioned earlier, our Q1 product revenue is impacted by a supply chain issue, which has been resolved, and we expect resumption of growth from the second quarter onwards. We expect Q1 non-GAAP total operating costs, which includes COGS, to be between $104 million and $100 million. We expect Q1 capital expenditures to be approximately $13 million. Non-GAAP operating results for the first quarter are expected to be between a profit of $68 million and $78 million. For non-GAAP interest and other income and expense, we expect $6 million of interest income. We expect that our pro forma tax rate for 2026 will be 16%, driven by tax legislation changes last year.
We expect non-GAAP tax expenses to be between $11.8 million and $13.4 million in Q1. We expect Q1 share count to be 110 million diluted shares outstanding. Overall, we anticipate the Q1 non-GAAP earnings per share range between $0.56 and $0.64. Let me finish with a summary on Slide 8. In closing, I am pleased with our excellent 2025 financial performance and the continued progress we are making against our strategic goals. We delivered record top-line revenue growth, resulting in record profitability and cash generation. Our diversified portfolio continues to be a core strength for the company. First, patent licensing continues to deliver consistent and predictable results. Also, our silicon IP portfolio is well-positioned to address the accelerating demand for AI solutions.
In addition, our product business continues to drive our growth with strong leadership and market share gains in our core RCD business, which is complemented by our expanding new product contributions. Overall, we are well-positioned to drive long-term shareholder value. Before I open up the call to Q&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&A. Could we have our first question?
Operator (participant)
Thank you. Ladies and gentlemen, if you have a question, please press star one on your touch-tone phone. The first question comes from Kevin Cassidy with Rosenblatt. You may proceed.
Kevin Cassidy (Analyst)
Yes, thanks for taking my question, and congratulations on the great results. But of course, the questions will be around the supply chain issue. I understand you've resolved the issue. Will there be catch up in the second quarter, meaning can you make up for that revenue loss in the first quarter, or is that just lost to market share that on a competitor picking up the business?
Luc Seraphin (CEO)
Thank you, Kevin. Let me maybe take a few minutes to explain what the supply issue is, so that we understand the dynamics in the market. So in Q4, as we said, we identified a back-end manufacturing issue with one of our OSATs. We have identified the root cause of that issue, and we have implemented all the corrective actions in collaboration with our supply chain partners. And before I go into the detail, note that the issue was affecting an extremely low number of parts, which made the identification of the root cause a bit difficult because it was hard to reproduce. But we have identified the root cause. We've put the measures in place, and in reality, what we've done is we've done two things.
The first thing we've done is once the root cause was identified and the corrective actions were in place, we did actually pull forward fresh material from inventory that was originally staged for Q1 to meet our Q4 customer demand, because our customer demand remained very strong in Q4. So that's the first thing we did. We accelerated fresh material once these measures were in place. The second thing we did is, despite the very, very low PPMs that we observed, and because quality is paramount, out of an abundance of caution, we actually quarantined all potentially impacted production material. And now we're retesting this material with enhanced screens in place. So these measures have put additional strain on capacity in a tighter supply environment, and that impacts, you know, Q1, as we said. But the issue was identified in Q4.
We accelerated material through, you know, after we've put the measures in place. We are rescreening parts that, you know, were potentially tainted, and that's what's creating that issue in Q1. So that issue is behind us, and the lower Q1 product revenue does not change the trajectory of the business. You know, we expect the business to return to strong growth in Q2, and the product revenue for 2026 remain on track to grow faster than market. And, you know, that's, that's how I would qualify the issue. Des, I don't know whether you want to add anything to this.
Desmond Lynch (CFO)
No, I think you summarized it well, Luc. You know, the issue in Q1 is behind us, and we're expecting strong recovery both in Q2 and also for the full year. And as you said, we do expect the business to grow faster than market for the year, so we're very well positioned, from here.
Kevin Cassidy (Analyst)
Okay, great. Thanks for that detailed explanation. You know, maybe a more difficult question, but what can you quantify what the revenue would have been?
Desmond Lynch (CFO)
Hi, Kevin, it's Des. You know, what I would say is that, you know, the impact would probably have been around low double-digit million impact in what's already a seasonally soft quarter for the business. So that's how I would sort of quantify the sort of Q1 revenue impact from there. As Luc mentioned, you know, we will build inventory by the end of sort of Q1, and we'll be in a position to return to strong growth in Q2 from there. But I would say quantification, probably in the low double-digit million impact is what I would say, Kevin.
Kevin Cassidy (Analyst)
Okay, great. Thank you for that help.
Desmond Lynch (CFO)
Thanks, Kevin.
Operator (participant)
Thank you. The following comes from Kevin Garrigan with Jefferies. You may proceed.
Kevin Garrigan (Analyst)
Yeah. Hey, guys. Thanks for taking my question. Hey, can you just talk about how your RCD market share finished for 2025?
Luc Seraphin (CEO)
Yes. Thanks, Kevin. So, you know, we believe that we ended up the year in the mid-40% share, you know, for DDR5. We, you know, we thought the market, you know, between 2024 and 2025, you know, grew mid-single-digit, but the portion of DDR5 became more important. You know, DDR4 continues to decrease in terms of share. So, you know, in 2024, we were in the early 40s for DDR5. You know, in 2025, we believe we are in the mid-40s on DDR5, we're in a market where DDR5 dominates even more. And I think as we said on the prepared remarks, you know, we expect to continue to grow faster than market in 2026, despite the glitch we had in Q1.
Kevin Garrigan (Analyst)
Okay, perfect. I appreciate that color. And then, just as a follow-up, so there's a lot going on with, you know, the Intel Diamond Rapids platform and, you know, even the AMD Venice platform. So just kind of wondering if the timeline and opportunity that you're expecting on the MRDIMM front hasn't changed at all?
Luc Seraphin (CEO)
Thanks, Kevin. No, it hasn't. We are monitoring, you know, the rollout of these platforms, as every generation has been, you know, the same dynamic. You know, the rollout of our products, you know, mostly depend on the rollout of the platforms from Intel and AMD. So, you know, we expect our MRDIMM to ramp towards, you know, the very end of the year at this point in time. But we will modulate that based on, you know, how the platforms roll out from both Intel and AMD are happening. I think that's nothing new. This has happened in every generation in the past. We are, you know, readying our products. We are working with the ecosystem to make sure that we are ready.
But eventually, you know, that will depend on when those platforms roll out. As far as we're concerned, you know, we are, you know, we're ready.
Kevin Garrigan (Analyst)
Okay, perfect. I, I appreciate the color, and congrats on the results.
Luc Seraphin (CEO)
Thank you.
Operator (participant)
Thank you. The next question comes from Aaron Rakers with Wells Fargo. You may proceed.
Aaron Rakers (Analyst)
Yeah, thanks, for taking the questions. I've got a couple, if I can, as well. I guess, first of all, going back to the supply chain issue, yeah, I can appreciate, you know, the issues have been rectified. I know, Luc, you've referenced a couple of times growing faster than the market. So, you know, I guess the question I have is: how do you define the growth rate of the market? We've seen a lot of data points where server demand looks like it might be as much as mid-teens, maybe even high teens in some of the commentary recently. So I'm curious if you can just kind of contextualize what you think the market growth rate is, in 2026, you know, underpinning your expectation of growing faster than that.
Luc Seraphin (CEO)
Yeah, thanks, Aaron. You know, we see a wide range of numbers, you know, for the market growth. You know, typically, as you know, there are many variables going into this. You know, one of the basics is really the market for servers. You know, the analysts, the marketing analysts, you know, have a range, you know, for market servers. Gartner is at 8%. You know, we hear from other sources that, you know, this could be, as you said, you know, double-digit growth. But, you know, we wanna stay prudent with the, you know, the view of the server growth, because we believe the demand is here.
But I think you know some people tend to underestimate the impact of potential shortage, you know, especially on the memory side. So you know we tend to align with Gartner's view, with you know 8% market growth for the servers. So we certainly you know exceed that. But you have other things happening. You know the number of channels increasing you know the introduction of new platforms. You know in our case you know we also are introducing our new products, so we're gonna be higher than that. But the basis we use is you know mid- to high-single-digit you know growth for the server market. That's our basis.
Aaron Rakers (Analyst)
Okay. That's very helpful. And then, kind of sticking with that, when we talk about your companion chip opportunities, I think last quarter you talked about the PMIC being, I wanna say, with mid-single-digit contribution to your total product revenue. Can you unpack that a little bit? How fast is that growing? What's the expectations for this year? Thank you.
Desmond Lynch (CFO)
Hi, Aaron, it's Des here. We're really pleased with the progress and traction that our new products continue to make in the market. Our new products have grown from low single-digit contribution in the first half of 2025 to upper single digits in Q4, which was in line with our expectations. As we look ahead to Q1, I do expect the strong traction really to continue, where I do expect the new products will continue to be... It'll grow to about double-digit contribution of total product revenue. We have traction across all of our products, but I would say that in terms of revenue contribution, PMIC remains the largest contributor there. Our customers continue to place value in the importance of the interoperability between RCD and PMIC.
As we look ahead into sort of 2026, with the continued rollout of new platforms, I would say that our new products are very well positioned within the market to continue to grow and take market share.
Aaron Rakers (Analyst)
Yeah. Thank you, guys.
Desmond Lynch (CFO)
Thanks, Aaron.
Luc Seraphin (CEO)
Thank you.
Operator (participant)
Thank you. The next question comes from Bastien Faucon with Susquehanna. You may proceed.
Bastien Faucon (Analyst)
Hi, guys. Thanks for taking my question. I guess, one question that I have is, revisiting the average of the DIMMs per CPU expected in 2027, and you mentioned it previously, given the cost of memory and the shortage, has this changed your expectations of how many channels are being populated with DIMMs per CPU? And I have a follow-up.
Luc Seraphin (CEO)
Thanks, Bastien, for your question. You know, the DIMMs per CPU dynamic is a complex one. Typically, what happens is, you know, people who want, you know, very high bandwidth, like in AI types of application, tend to use fewer DIMMs per channel so that they can make the best use of these bandwidth. And people who are in need of more capacity tends to populate more DIMMs, you know, on their channels. And then you combine this with you know, the respective growth of standard applications with AI applications. So we continue to see, you know, on average, you know, the number of DIMMs per channel growing, but it's a bit difficult to... It's a bit difficult to, to really put a number on.
I think the memory situation is a broader situation than the number of DIMMs per channel. You know, I think, thank God memory is booming these days. There's dynamic between HBM and standard DDR, for example.... And, you know, with a standard DDR, there's dynamic between the different speeds of these DDR. So I think, you know, overall, we believe that the market is gonna be constrained. But again, trying to put a number on how, you know, the supply constraints on the memory side is going to impact the number of DIMMs per channel is something that is quite, quite difficult to figure out.
Bastien Faucon (Analyst)
Right. That's, that is very helpful. And I have a follow-up. In terms of RCD contribution, you know, what are your expectations of the DDR5 Gen 3 RCD contribution relative to the Gen 1 and 2 in 2026, given the supply chain issue that you've encountered with your RCDs that will be impacting Q1?
Luc Seraphin (CEO)
Yeah, that's a good question. Thank you. You know, what we saw is, in Q4, Gen 2 was predominant. You know, this is what we were expecting, and Gen 3 was starting to ramp. It was growing in Q4 compared to Q3. You know, when we look at 2026, our view is that Gen 3 will continue to grow and will probably be the predominant version of DDR5, you know, throughout the year. You know, Gen 4 will contribute somehow, but because this is on a different type of core, it will have more limited adoption. The big next step is gonna be Gen 5, and Gen 5, you know, as we said earlier, is gonna depend on the introduction of the next generation platforms from Intel and AMD.
So in summary, we continue to see Gen 2, Gen 3, and the mix between Gen 2 and Gen 3 is changing. You know, Gen 3 is growing, and our expectation at this point in time is that Gen 3 is gonna be dominant in 2026.
Bastien Faucon (Analyst)
Thank you very much.
Luc Seraphin (CEO)
Thank you.
Operator (participant)
Thank you. The next question comes from Gary Mobley with Loop Capital. You may proceed.
Gary Mobley (Analyst)
Hey, guys. Thanks for taking my question. I had a multipart follow-up question about the supply chain issue. First, do you see any reputational harm from this with your customer base? Did it impact the companion chip business more than the RCD business? I guess logically, you know, we should assume a sharp revenue recovery in Q2. It sounds like Q1 revenue would have been about $99 million-$100 million, you know, which is described as seasonally weak, and therefore, if you're going to, you know, recover that revenue and gain share in the year, presumably Q2 revenue would have been up sequentially from that. So can your supply chain recover to that degree, that quickly, to get back to the $100 million+ per quarter in product revenue?
Luc Seraphin (CEO)
So thank you, Gary, for your questions. I'll start, you know, with your initial questions and then Des comment on the numbers. Your first question is about the reputational risk. No, there's no reputational risk. Actually, when we identified that issue, we had all hands on deck, and we worked in close collaboration with, you know, our suppliers and our customers. And I think it's really, really important. We said, you know, over and over again over the last few years, that you know, quality management is really, really important. We had a real-life example here, where we identified an issue quickly. We had a very thorough quality process in place, you know, with our suppliers, with our customers, and we're back on track.
You know, the only issue that is left for Q1 is the fact that we need to replenish, you know, our supply chain and make the best use of our, you know, testing capacity as we are also retesting old parts. So, but the reputation has not been damaged. You know, we've been able to identify the problem, fix the problem, and put, you know, actions in place quite quickly. The second question was about, you know, whether it affected the RCD or the other chips. It only affected the RCD and actually, you know, older versions of the RCD, but the companion chips were not affected at all on that. You know, on the numbers, maybe, Des, you want to comment?
Desmond Lynch (CFO)
Hi, Gary, it's Des. In terms of the inventory, I do expect that the inventory will be replenished by the end of sort of Q1, and we'll be able to grow the inventory to a level which will be able to support our Q2, 2026 demand and going forward from there. So again, as Luc talked about, you know, the issue has been contained. We'll continue to replenish our inventory as we go throughout Q1, and that will put us in a good position ending Q1 for meeting customers' demand for Q2 going forward.
Gary Mobley (Analyst)
Got it. So follow-up, I want to ask about MRDIMM. Based on what you're seeing in timing of Venice shipments and Diamond Rapids shipments, and so the queuing, the memory ecosystem around those two server processor launches, do you still see revenue contribution, I guess, material revenue contribution, from MRDIMM by the end of the calendar year?
Luc Seraphin (CEO)
You know, as we said earlier, we are monitoring the, you know, the rollout of these platforms, and we are still continuing, you know, activities around MRDIMM. As we said on the earlier call, we see the initial contribution towards the end of the year. That's, you know, the, the very initial contribution of these, these platforms is gonna be, you know, towards the very end of the year, and the main contribution is happening in 2027.
Gary Mobley (Analyst)
All right. Thank you.
Luc Seraphin (CEO)
Thanks, Gary.
Operator (participant)
Thank you. The following comes from Tristan Gerra with Baird. You may proceed.
Tristan Gerra (Analyst)
Hi, good afternoon. It looks like you started to be a little bit more bullish on your market share prospect in RCD with the companion chips ramping. Is that the reason why we're now seeing market share that it looks like is, you know, above what your expectation was a year ago, and, you know, mid-40s, and what would be kind of the upside that you think you could get to by end of this year or even next year?
Luc Seraphin (CEO)
Thanks, Tristan. I'll make the first comment about the market share. When we talk about, you know, being in the mid-40s, it's for DDR5 RCDs. You know, so these market share gains, you know, year-over-year, are really referring to the RCD chip. And this is the result of you know, the increased design win footprint we were able to secure, you know, from generation to generation. You know, from D4 to D5, we had many more, much higher footprint. And at every generation of D5, we increased our footprint in terms of design wins. That translates into, you know, our market share for the RCD chip. So when we mentioned that in 2025, you know, our market share was in the mid-40s, that's on the DDR5 RCDs.
And you know, the DDR5 overall generation is still early in its cycle, so there's still room to gain share, you know, in the mid-40 now. We always said we could be between 40 and 50, so we're still chasing, you know, more share, you know, on the DDR5 RCD chip. You know, the companion chips are an addition to this, you know, and they're ramping steadily, slowly, you know, as Des explained, you know, into the market, as you know, the qualifications take place. But this is gonna be additional revenue to the RCD revenue.
Tristan Gerra (Analyst)
Yeah. And I was just wondering if the fact that you have companion chip, does that help your RCD share, or is that completely separate? I sense that perhaps you saw some cross-selling opportunities or benefits, you know, that will go beyond just the additional TAM of the companion chip. And then also my follow-up question is, if there's any update on the potential CAMM2 opportunity, whether it's in the current Blackwell platform or the upcoming platform for you to potentially participate?
Luc Seraphin (CEO)
Yes, I'll answer first on the, you know, on the complementarity, the TAM. Yeah, one way to look at it, as you rightly say, is to add the TAMs. But is there a connection between the two? There's an indirect impact. You know, as the speeds on the DIMMs continue to increase, it is more and more important for our customers to get their chips from the same supplier for interoperability reasons. You know, these systems are very, very complex. And, you know, if we have all chips in-house, we can do a lot of system testing before shipping those parts to our customers. So that puts us in a favorable, you know, position.
So there's a positive indirect impact, you know, on our ability to grow our PMIC, in particular, but also the other companion chips, as the speeds on the RCD continue to increase. So that's the answer on that. On the CAMM, you know, we continue to monitor, you know, the dynamic there, you know, on the CAMM. There's definitely, you know, an SPD opportunity on the CAMM for us. You know, we're talking about next generations and how, you know, these next generations can evolve, in particular, in this, in the field of power management. That could open, you know, other opportunities in the future.
But I would say this, as we said in the prepared remarks, you know, our strategy is to have solutions for every JEDEC standard module, whether, you know, it's on the client side, or whether it's on the, you know, on the data center side. So we will continue to monitor what's happening, you know, with CAMM2. On CAMM2, we have an opportunity for the SPD Hub. As the evolution of CAMM2 continues and new chips are being defined, we're gonna be part of that definition, and we'll continue to develop chips, to support that market.
Tristan Gerra (Analyst)
Great. Thank you very much.
Luc Seraphin (CEO)
Thank you, Tristan.
Operator (participant)
Thank you. The next question comes from Sebastien Naji with William Blair. You may proceed.
Sebastien Naji (Analyst)
Yeah, thank you for taking the question. Could you maybe remind us how much of your product business today is not related to the server market? You mentioned some early success in the client market. And as we think about 2026, does rising memory cost maybe create some friction in this part of the market for Rambus?
Luc Seraphin (CEO)
The client market remains minimal for us at this point in time, you know, for a couple of reasons. One is the adoption of, you know, the CKD chip, you know, or the equivalent of the clock chip into the client space, really is limited to the very, very high-end, you know, parts of that client space. So you know, the contribution is minimal in terms of numbers. You know, our goal is still, you know, to get 20% share, you know, in the long run for that. But these platforms have to, you know, ramp in the market. Their contribution are still going to be minimal, you know, even in 2026 for client. So the vast majority of the business is in the data center space.
But this being said, you know, in the long run, the power management and the clock management are going to be very, very important in the client space as well. It's important for us to position ourselves there and to have solutions for all, you know, platforms. So that's why we are-- we're doing this. In terms of the client space. And your second question was?
Sebastien Naji (Analyst)
Oh, no, no, that was, that was my first question. My, my second question-
Luc Seraphin (CEO)
Oh, that was your question. Okay, thank you. Yeah.
Sebastien Naji (Analyst)
IP side of the business, if I may.
Luc Seraphin (CEO)
Okay.
Sebastien Naji (Analyst)
So, you know—
Luc Seraphin (CEO)
Uh-huh.
Sebastien Naji (Analyst)
Rambus has benefited a lot from the explosion in the number of ASICs that are being designed. You have many companies attempting to design their own XPUs. You've also seen an accelerated cadence of new chip releases. As we go into 2026, are you seeing any signs of a slowdown in some of these new chip design starts or that could start to impact your IP business?
Luc Seraphin (CEO)
Well, I'll start. You know... Oh, you wanna go with this? Go ahead. Yeah.
Desmond Lynch (CFO)
I'll start, Luc, and maybe you can add on. Yeah, we were very pleased with how our silicon IP business performed in 2025. It performed in line with the expectations, and the portfolio is really well positioned to address the demand for AI solutions from there. If you look at our portfolio, with a leading-edge portfolio with critical IP solutions and the high-speed memory, interconnect and security IP, which is tailored towards the AI sort of workloads from there. And our expectation is that that would continue to grow in 2026, in line with our long-term growth expectations from there. So very bullish on our overall sort of portfolio and outlook for the IP business.
Sebastien Naji (Analyst)
Great. Thank you.
Desmond Lynch (CFO)
Thanks.
Operator (participant)
Yeah. The following is a follow-up from Kevin Cassidy with Rosenblatt. You may proceed.
Kevin Cassidy (Analyst)
Yeah, thanks for taking my follow-up. And maybe along those lines of custom, Luc, I think you had mentioned custom hardware, and I wonder if you could give us a little more details on that. Is how many customers can you support, and what would be the timing of that?
Luc Seraphin (CEO)
Yes. When we say custom hardware, you know, there are a lot of people who are developing their own chips, you know, for their AI infrastructure or their server infrastructure. Typically, you know, accelerators, you know, chips that are dedicated to inference and these kind of things. So every time they do develop those type of chips, you know, they have a potential need for HBM, and at high speed, PCIe at high speed, or security solutions, so GDDR sometimes. So, as you know, we position our portfolio to be at the high end of those standards. So we typically talk to the people who work, you know, at the high end of those systems. We can support a large number of customers because we have a limited portfolio in terms of the scope.
You know, we focus on PCIe, CXL, HBM, GDDR, you know, and security IP. So we have a laser-focused portfolio that addresses, you know, potentially a large number of customers who are working on the leading edge of those technologies. That's really what's driving, you know, the business for us, as opposed to, you know, potentially other IP suppliers who have a much broader portfolio. We narrow our portfolio for the needs of people who develop chips for the data center, and most of these chips are either their own processors, some people develop their own processors as opposed to you know, buying merchant processors. Other types of applications are accelerators to improve the performance of their systems.
Kevin Cassidy (Analyst)
Okay, great. Thank you.
Operator (participant)
Thank you. We have another follow-up from Aaron Rakers with Wells Fargo. You may proceed.
Aaron Rakers (Analyst)
Yeah, thanks for taking the follow-up questions. I guess the first one is, you know, Luc, you mentioned like, you know, there is risk in terms of memory supply and availability. I'm curious, as you look back at this last quarter or coming out of, you know, the last quarter in these first couple of weeks of this first quarter, have you seen any signs of memory constraints impacting your customers' ability to fulfill demand? Or any—how would you characterize inventory levels that you're seeing at some of your major customers? Any thoughts on that would be great.
Luc Seraphin (CEO)
Yes, sure. You know, we are in a small, you know, ecosystem, as you know. And when we talk to our customers and partners, we hear those comments, you know? And one of the common theme that we hear is that, you know, the demand, you know, for servers is solid. You know, there's a refresh cycle, there's a, you know, that is not over. There's also, you know, agentic AI and all the inference applications that drive demand. But what we hear from the same customers is that they're gonna be constrained by supply.
You know, and we hear this directly from our customers, and this is why, you know, when we look at, you know, the market potential for us, you know, we tend to be prudent, because we are aware, you know, of these comments, you know, from our customers in terms of supply. So that's what the basis of what our comments are.
Aaron Rakers (Analyst)
Yeah.
Luc Seraphin (CEO)
We see, you know, on the supply side, we also see Aaron, on the supply... Excuse me. On the supply side, you know, we also see, you know, lengthening lead times. It's nothing to do with the memory guys, but there's also, you know, on the supply side, you know, lead times, you know, continue to increase. And that's why we believe in 2026 the demand is solid, but we're gonna be more constrained by supply than we're gonna be by demand.
Aaron Rakers (Analyst)
Yeah, that's helpful. And then, guys, real quickly on the gross margin line, you know, I wanna make sure I'm clear. Like, given the supply chain issues, you don't expect any kind of gross margin, any kind of inventory provisions or anything of that nature? And I guess what I'm trying to get at is, you know, the product gross margin looks like it's, you know, still hovering in that +60% range. Is that still the expectation that we stay in that low 60% range here as we look forward? Thank you.
Desmond Lynch (CFO)
Hi, yeah, that would be the right expectation going forward. If you look at the full year of 2025, you know, our gross margins were around 61.5%, which was in line with 2024's performance and consistent with our long-term model of 60%-65%. I think what you will see is that we have a strong track record of delivering gross margins in line with these targets, and that would be my expectation. If you really look where we've been operating in the last sort of three years, we've been in a tight range of 61%-63%, and I think that would be a fair way to think about the business in 2026 from a gross margin perspective.
We'll continue to be disciplined in our approach to pricing, and as always, we'll continue to drive manufacturing cost savings going forward, which enables us to drive to the gross margins within the range I mentioned earlier.
Aaron Rakers (Analyst)
Perfect. Thanks, guys.
Desmond Lynch (CFO)
Thanks, Aaron.
Operator (participant)
Thank you. At this time, there are no further questions. This concludes the question and answer session. I would now like to turn the conference back over to the company.
Luc Seraphin (CEO)
Thank you, everyone, who has joined us today, for your interest and time, and we look forward to speaking with you again soon. Have a great day. Thank you.
Operator (participant)
Thank you. This now concludes today's conference.