What is the nature of the agreement between NVIDIA and Rambus?

NVIDIA has signed a patent license agreement with Rambus, granting NVIDIA a license to use certain Rambus memory controllers in its products.

What are the financial implications of this agreement for NVIDIA?

NVIDIA will pay royalties to Rambus based on the net sales of products using the licensed memory controllers. The royalty rates vary by controller type, with a cap on the net sales price for calculation purposes. Importantly, NVIDIA's Q3 2011 financial guidance already incorporates these royalty costs.

How long is this license agreement in effect?

The agreement is effective until December 9, 2014. However, NVIDIA has the right to terminate the agreement earlier, specifically on or after August 12, 2011, by providing 30 days' written notice to Rambus.

Does this agreement resolve any past or potential future patent disputes between NVIDIA and Rambus?

The filing indicates a licensing agreement, which generally aims to prevent future litigation by providing a legal framework for technology usage. However, the filing does not explicitly state whether this resolves all outstanding patent disputes or prevents future ones.

NVDA 8-K: Material Agreements

Summary

NVIDIA Corporation (NVDA) has entered into a material definitive agreement with Rambus Inc., executing a memory controller patent license on August 11, 2010. This agreement grants NVIDIA a non-exclusive, worldwide license for specific Rambus memory controllers, crucial for NVIDIA's product development and manufacturing. The terms involve royalty payments to Rambus based on a percentage of net sales for different types of memory controllers, with a capped maximum deemed price per unit for certain products. This development is particularly significant as NVIDIA's previously announced financial outlook for the third quarter of 2011 already factored in the cost of these royalties, indicating proactive financial planning.

Key Highlights

1NVIDIA entered into a memory controller patent license agreement with Rambus Inc. on August 11, 2010.
2The license grants NVIDIA a non-exclusive, worldwide right to use certain Rambus memory controllers.
3Royalties are structured as 1% for SDR memory controllers and 2% for other types (DDR, LPDDR, GDDR variants, etc.).
4A maximum average net sales price of $20 per unit is established for royalty calculation on specific controller types.
5The agreement is set to expire on December 9, 2014, but NVIDIA has an early termination option after August 12, 2011.
6NVIDIA's Q3 2011 financial outlook, previously disclosed, already accounted for the impact of these royalty payments.

NVIDIA CORP 8-K Report, Material Agreement (Aug 13, 2010)

Summary

Key Highlights

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