One Last Job
A lone gunslinger/thief/detective needs one last showdown/heist/case before riding off into the sunset. Pick your hero. He's seen some stuff. He's close to retirement. He's enticed to return to the work for just one more job. It’s a classic Hollywood story. Eastwood did it in a Fistful of Dollars. Robert DeNiro followed the trail in 1995's Heat. Leonardo DiCaprio did it in Inception. And Sean Fan is blazing that trail at Rambus.
Return to office
Sean is COO at Rambus. He joined in 2019 from the company's biggest (really, only) rival, Renesas. He came over after Renesas bought his prior employer, Integrated Device Technology. He's been running Rambus' shift from royalties to products. Lamplighter's talked about the business shift before.
The job
As part of its push into products, Rambus introduced a new executive pay package In 2022. All the execs got tied to the performance of the SOX semiconductor index. This ties their incentives to what investors want: index goes up. Execs get paid if Rambus goes up more. Great for shareholders.
Sean got a special package. The board tied his comp to product sales. He'd get a huge bounty of shares for hitting sales targets over the next four years. The sales targets are cumulative. 2026 is Sean's last year to finish the job.
Spoiler alert
Is he close? Lol. No. He'd need to grow Rambus' product sales by about 160% next year. It’s grown 45% so far in 2025. Could Rambus get there? Sure. Whatever. OpenAI promised to spend $1.4 trillion on computing stuff. Who knows what can happen in the wild west of computing hardware these days. Is it likely? No.
So, Sean flopped? Not exactly. Rambus' products mostly go into traditional CPU-type servers (think Intel not Nvidia). While AI's been a massive tailwind for computer hardware overall, it hasn't been as big a tailwind for Rambus like it has for Nvidia. More to the point, Sean's pay package didn't hinge on AI being a generational technology shift. It hinged on Diamond Rapids.
The sequel
Intel's "Rapids" series of processors serve Data Center customers. DC's demand ever-escalating high performance. They're already struggling to keep up with demand. They want more capabilities. Diamond Rapids is part of Intel's efforts to meet this demand for compute.
Intel originally set the launch date for Diamond Rapids "by 2025." That's right in the middle of the years covered in Sean's pay package. Rambus had been counting on getting a big boost in content, prices and volume from Diamond Rapids. It hasn’t happened. Intel missed the release date. Now, Intel hopes to get it out the door by the end of 2026.
The aftermath
Intel missing a release date doesn’t tell us much about Sean's performance or about Rambus' prospects or about how that works into Rambus as an investment. We can take away a few things, though.
Rambus thought it could sell $2bn of products over the next four years. $2bn was Sean's baseline target. About half of that ought to have come from new products. That gives investors an idea of what Rambus might do once the market for those products finally opens -- at least a billion in sales over four years.
The board set that target back in 2022, before ChatGPT entered the ring. Since then, AI has triggered a gold rush in computing hardware. It’s boomed for AI dedicated GPUs and also for more boring AI inference-oriented CPUs, like the ones Rambus mostly serves. Even Rambus -- not an AI-focused company -- made hay, growing product sales 45% this year. The board's expectations for its product business have surely grown since 2022. Sean’s pay package expires next year. This gives the board a chance to redo the pay package and give Sean another shot when the market for Rambus' new products opens. This would give investors a nice look at the change in management's long-term expectations from 2022 to today.
Sean won't get that payday from the 2022 plan. He won't get to ride off into the sunset, yet. The fault mostly lies with Intel, not Sean. It's certainly not the last ride for the product business. It's just delayed. Whether Sean gets one last ride at that pay package, Rambus’ upcoming product lineup looks poised to deliver. Management had high expectations in 2022. They’d expected new products to be a big piece of Rambus’ value by 2025. Judging by the bonanza in computing since then, it might be an even bigger opportunity to come.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.