Rambus Inc (RMBS) 2021 Q4 法說會逐字稿

Welcome to the Rambus Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Desmond Lynch, Vice President of Finance and Investor Relations, you may begin your conference.

Thank you, operator, and welcome to the Rambus Fourth Quarter and Full Year 2021 Results Conference Call. I am Desmond Lynch, VP of Finance and Investor Relations. And on the call with me today is Luc Seraphin, our CEO; and Keith Jones, our interim CFO.

The press release for the results that we will be dosing today has been filed with the SEC on Form 8-K. A replay of this call will be available for the next week at (855) 859-2056. You can hear the replay by dialing the toll-free number and then entering ID number 5264419 when you hear the prompt.

In addition, we are simultaneously webcasting this call and along with the audio, we are webcasting slides that we will reference during portions of today's call. So even if you're joining us via conference call, you may want to access the webcast with the slide presentation. A replay of this call can be accessed on our website beginning today at 5:00 p.m. Pacific Time.

Our discussion today will contain forward-looking statements including our expectations regarding business opportunities; industry growth rates; product and investment strategies timing of expected product launches; demand for existing and newly acquired technologies; the growth opportunities of the various markets we serve; the expected benefits of our merger, acquisition and divestiture activity, including the success of our integration efforts; the company's ability to deliver long-term profitable growth; the long-term sustainability of the company's increased product revenue and cash generated from operating activities; the company's outlook and financial guidance for the first quarter of 2022 and related drivers; the company's ability to effectively manage supply chain shortages; risks and the potential adverse impacts related to or arising from COVID-19 and its variants and the effects of ASC 606 on reported revenue, amongst other things.

These statements are subject to risks and uncertainties that are discussed during this call and may be 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 quality in the financials, we're 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.

We adopted ASC 606 in 2018 using the modified retrospective method, which did not restate prior periods but rather ran the cumulative effect of the adoption through retained earnings as a beginning balance sheet adjustment. Any comparison between our results under ASC 606 and prior results under ASC 605 is not an accurate way to track the company's progress. We will continue to provide operational metrics such as license 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, Keith 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?

Thank you, Des, and good afternoon, everyone. 2021 was a great year for Rambus, driven by strong execution by our global teams and continued product growth. We delivered an excellent fourth quarter with $91.8 million in revenue, exceeding revenue and profitability targets for the quarter.

It was also an outstanding quarter for cash generation. We set a 10-year high with $72 million in cash from operations in Q4 and a new annual record at $209 million for the full year. Our ability to generate strong cash from operations allows us to both continue to invest in new products and to return value to stockholders.

As we continue to scale the business, we benefit from a balanced and diverse portfolio of offerings and revenue contributions across chips, silicon IP and patent licensing. Memory interface chips contributed to record product revenue for the second consecutive quarter at $45 million, which is up 23% over last quarter's record. This brought the full year revenue to an annual record of roughly $144 million, growing the chip business by 26% over 2020. We achieved key milestones throughout the year that drove the product business performance.

We continued to focus on execution with our first-generation DDR5 RCD. This product is in volume production and has a growing qualification footprint in next-generation systems. As we mentioned last quarter, we were also the first to sample a second generation DDR5 RCD. We are sampling our second-generation products to customers and have begun receiving preproduction orders for the second half of the year. Being first to market on DDR5 has given us an edge to gain share during the DDR5 transition cycle.

We had a strong year. However, it is important to acknowledge the continued industry-wide challenges in semiconductor supply chains. We are working closely and proactively with our supply chain partners to minimize the impact of any disruptions and focus on our ability to meet the growing demand for our products. Despite these supply chain challenges, we delivered record results and expect the business to continue to grow in 2022.

In addition to the record financial performance, the team continues to broaden the range of products and available markets with the ongoing development of new DDR5 companion chips and CXL interconnect solutions.

Let's turn now to silicon IP. Through a combination of disciplined execution and strategic investments to scale the business, we have grown to a run rate of over $100 million a year in bookings, and it continues to grow. We are leading in our chosen focus areas, including HBM, CXL, PCI Express and security IP (sic) [silicon IP], and see a growing number of design wins across our target markets.

Our silicon IP business contributes to the company's balanced revenue streams, diversity in the customer base and broad relevance in the ecosystem. It also gives us the ability to leverage the solutions developed for the data center and the edge to address additional markets like automotive IoT and government.

In closing, this was an exceptional year for the company. We increased our investment in ESG and are ensuring that we're working with environmentally conscious companies that share our values and commitments to the health and welfare of employees and the community. We successfully closed key patent licensing agreements, solidifying our foundation of sustained cash generation and continued investment. We returned $100 million to our stockholders through an accelerated share repurchase program. We acquired and integrated 2 silicon IP companies, augmenting our world-class design team and product portfolio. We exceeded our road map for next-generation data center solutions with the launch of the CXL initiative and the development of DDR5 companion chips, helping to double our TAM in the years to come.

And finally, we expanded our technology leadership with key product releases and performance milestones, including the production ramp of our DDR5 RCD expanding our market share. I'm very proud of what the Rambus team has achieved. We said we would deliver profitable growth, and we did. With the expansion of our product road map into new chips, the industry transition to new memory and interface technologies and the growing demand for state-of-the-art security technologies across a wide range of markets and applications, we are very excited about the prospects of 2022 and beyond.

With that, I'll turn the call over to Keith to discuss the quarterly financial results. Keith?

Thanks, Luc. I'd like to begin with a summary of our financial results for the fourth quarter and for the full year 2021 on Slide 5. Once again, we delivered great results this quarter with product revenues growing 23% and generating $72.2 million in cash from operations. The cash flow contributions is an all-time record for us in our evolution as a products company and is a clear testament to our success in profitably growing the company. Our ability to consistently generate cash has helped us both invest in our strategic growth drivers and consistently return capital to shareholders.

Let me walk you through our non-GAAP income statement on Slide 6. Revenue for the fourth quarter was $91.8 million, exceeding our expectations Royalty revenue was $32.9 million, while licensing billings was $66.6 million. The difference between licensing billings and royalty revenue primarily relates to timing as we don't always recognize revenue in the same quarter as we bill our customers. Product revenue was $45.3 million, consisting primarily of our memory interface chip business.

As Luc mentioned, memory interface chip revenue was the record for the company despite the supply chain challenges seen in our industry, and we are delighted to see such strong demand from our customers. Contract and other revenue was $13.6 million, consisting primarily of our silicon IP business.

Total operating costs, including cost of goods sold for the quarter came in at $65.4 million. Operating expenses of $51.4 million were in line with our expectations. We expect to continue to grow investments and expand our product road map in the coming quarters as we further expand our product portfolio to help drive our long-term growth.

We ended the quarter with a total headcount of 690 employees, which was relatively flat from the prior quarter. Under ASC 606, we recorded $1.9 million of interest income related to the financing component of fixed fee licensing arrangements for which we have recognized revenue but not yet received payment.

We incurred $800,000 of interest expense primarily associated with our convertible notes. This was offset by the incremental interest income associated with our cash and investment portfolio. After adjusting for noncash interest expense on the convertible notes, this resulted in non-GAAP interest and other expense for the fourth quarter of $800,000. Excluding financing interest income related to ASC 606, this would have been $1.1 million of interest and other expense. Using an assumed flat tax rate of 24% for non-GAAP pretax income, non-GAAP net income for the quarter was $20.6 million. With disciplined execution and focus in a difficult industry-wide supply chain environment, we again delivered earnings that were above expectations.

Now let me turn to the balance sheet details on Slide 7. We ended the quarter with cash, cash equivalents and marketable securities totaling $485.6 million, up from the pre previous quarter as we generated cash from operations of $72.2 million. As we deliver on the top line and execute on operational efficiency, we expect to continue to deliver strong cash from operations in the future.

At the end of Q4, we had contract assets worth $258.6 million which reflects the net present value of unbilled accounts receivables related to licensing arrangements for which the company has no future performance obligations. We expect this number to continue to trend down as we bill and collect for these contracts. It is important to note this metric does not represent the entire value of our existing licensing agreements as at each renewal opportunity, we restructure our patent agreements in a manner that allows us to recognize revenue each quarter.

Fourth quarter CapEx was $8.9 million, while depreciation expense was $5.7 million. We delivered $63.3 million of free cash flow in the quarter. Looking forward, we expect CapEx for the first quarter to be roughly $7 million. As a reminder, the forward-looking guidance reflects our current best estimates at this time and our actual results can differ materially from what I'm about to review. In addition to the financial outlook under ASC 606, we've also been providing information on licensing billings, which is an operational metric that reflects amounts invoiced to our licensing customers during the period adjusted for certain differences. As we have reported historically, licensing billings closely correlates with what we had historically reported as royalty revenue under ASC 605.

Now let me turn to our guidance for the first quarter on Slide 8. Under ASC 606, we expect revenue in the first quarter between $91 million and $97 million. We expect royalty revenue between $30 million and $36 million and licensing billings between $64 million and $70 million. We expect Q1 non-GAAP total operating costs, which includes cost of goods sold, to be between $69 million and $73 million as we increase our investments in strategic initiatives and expand our product portfolio.

Under ASC 606, non-GAAP property results for the first quarter is expected to be between a profit of $17 million and $27 million. For non-GAAP interest and other income and expense, which excludes interest income related to ASC 606, we expect approximately $1 million of expense, which includes $600,000 of interest expense related to the convertible notes due in 2023. We expect the pro forma tax rate to remain consistent at roughly 24%. The 24% is higher than the statutory tax rate of 21% primarily due to higher tax rates in our foreign jurisdictions. As a reminder, we pay roughly $20 million of cash taxes each year, driven primarily by licensing agreements with our partners in Korea.

We expect non-GAAP taxes to be between an expense of $4 million and $6 million in Q1. We expect Q1 share count to be roughly 115 million basic and diluted shares outstanding. Overall, we anticipate non-GAAP earnings per share range between $0.11 and $0.18 for the quarter.

Let me finish with a summary on Slide 9. Our financials results for 2021 showed great growth and sustained profitability and continued investment in our long-term growth and strategies. We saw our memory interface chip business drive record annual product revenue of $143.9 million reflecting 26% year-over-year growth as we outpaced the market and continue to gain market share.

With that being said, I'm pleased with our execution. This growth has been achieved during a challenging industry-wide supply chain environment. Our silicon IP business continues to show great momentum and scale as the business also had a record performance and exited the year with an annual run rate in excess of $100 million.

As a reminder, in 2021, there was approximately $50 million of our silicon IP business that's reflected in our licensing billings. Our patent license business remains the backbone of our financial base and continues to provide consistent and predictable financial results.

Our ability to grow revenue profitably resulted in record cash flows from operations of $209.2 million for the full year. Our proven track record of cash generation helps us fund our strategic initiatives to invest in our product portfolio, make inorganic acquisitions and return value to our shareholders through stock repurchase programs. Leveraging our strengths and with focused execution, we made great strides in 2021. This will serve as the foundation for future success as we are well positioned in the data center and cloud markets and we anticipate long-term growth.

Before I open the call up to Q&A, I'd like to thank our employees for the continued teamwork, execution and resilience during these uncertain times. We truly appreciate your dedication and commitment as we all look forward to continued success in 2022.

With that, I'll turn the call back to the operator to begin Q&A. Can we have our first question?

(Operator Instructions)

Your first question comes from the line of Gary Mobley with Wells Fargo Securities.

Let me congratulate you on a strong finish to the year and what seems to be a good start to the current fiscal year. I wanted to start off by asking about some of the supply/demand dynamics on the chip side of the business, the buffer chip specifically. I'm curious if we're in a situation where your revenue is constrained by supply, and if so, to what extent? And I know it's a week-by-week situation and trying to get enough product from your fab partners, maybe perhaps if you can give us an update in terms of your visibility on that particular front as well.

Gary, thanks for your question. I'm Luc. Yes, we have supply constraints for the buffer chips and yet we grew our revenue 26% over the previous year. And during this last quarter, being Q4, we grew 23% over the previous quarter. So we continue to grow and gain share in a market that is growing single digits. So we're able to do that.

We could have generated a few more million dollars of revenue last year had you had the supply that we required. And as you said in your question, we're working on this literally on a weekly basis both with our suppliers and with our partners to minimize any disruption from supply and to maximize our revenue with our customers. We don't have much visibility beyond 90 days, and I think we're going to stay in that low visibility environment until the second half of this year. Unfortunately, this is what we're facing today. But this being said, we're very happy with the demand. I think it's driven by fact that the last generation of Ice Lake, we had a better footprint in terms of design wins, so that generated DDR4 revenue.

And we started to ship DDR5 in volume in anticipation for the DDR5 platforms to be launched in the market in next year. So that design win footprint from generation to generation is increasing the demand for our products. It's good for us. We're growing our business faster than market. We're constrained by supply and working this on a weekly basis with our suppliers.

And Gary, can I add to that, To Luc's point, we are very excited with the demand that we're seeing. But however, there is a noticeable difference between our demand forecast and our supply forecast. So from a demand perspective, as Luc mentioned, we're seeing great momentum from DDR5 and DDR4. And we're just really pleased with the traction we're making in the marketplace.

However, from a supply perspective for our product business, we are constrained. And that's fundamentally how we have to manage the business. And to add a little bit more color, if we take a look at what the consensus for the analyst models that were put out as part of the Q3 earnings process, those consensus product numbers are really in line with what we see for the full year 2022 from a product revenue perspective. We see some differences within the quarters, but for the full year. And that's just clearly due to the supply constraints.

So that's why we're still a bit cautious, and we have good visibility for 90 days, as Luc had talked about, but for the further we look out, it's a little bit more challenging.

Got it, Keith. And Luc, on the topic of the buffer chip business, I realize that DDR5 is probably a large mix of the total buffer chip revenue today, but -- maybe if you can give us a sense of what it might represent at an exit run rate at the end of the fiscal year. And then as well, how would you characterize your market share in DDR5 relative to DDR4? Is it moving higher?

Great question, Gary. I think in the Q4 that might not reflect -- it will be the market in the sense that this is the first quarter where DDR5 buffer chips going to be shipped to the market. So we have a combination of, as we said earlier, higher ASP, which typically happens when you move from one generation to the other. The other aspect of the question is that the DIMM manufacturers have to build DIMM in preparation for the launch of the platforms next year. So we have a combination of an unusually high demand for DDR5 in the fourth quarter, which is normal prelaunch of the platform, with unusually high ASP. I think over time, this is going to normalize. As Keith said, we're confident with the revenue that we talked about in Q3 for the year 2022. And over time, pricing between DDR4 and DDR5 is going to normalize. But I would say that Q4 is an outlier quarter from that standpoint.

And your next question comes from the line of Sidney Ho with Deutsche Bank.

Great. I'll add my congratulations, a very solid quarter and guide. My first question is just a follow-up with the previous question on the product side. Specifically related product gross margin, it was very strong in Q4. It seems like you already answered this part. It sounds like better ASP was the reason. But beyond that -- beyond the first quarter, when you look at the mix of this year's kind of growth, it seems like you're suggesting 30%, 40% kind of a growth is doable. What kind of product gross margin do you expect? And maybe can you talk about the puts and takes on what's driving the gross margin, the product gross margin specifically?

Sidney, so on the gross margin side, you saw in Q4, we had a relatively high gross margin at 71%, and that was really due to having a little bit more DDR5 mix during the quarter. But however, as Luc mentioned, DDR5 is in its early stages of ramping, and we had some very favorable ASPs in 2021. And starting in 2022, we're going to see a lot more normalized pricing. We're going to see that immediately throughout the year.

And just kind of given where DDR5 ends and DDR4 is relative to their product life cycles, overall, the blended gross margin rate is going to be at that 60% to 65% that we've consistently and historically been talking about.

Okay. That's helpful. Maybe switching gears to the capital returns. You guys generated very consistent cash flow from operations and call it the -- around the $200 million range. Your cash balance is close to $500 million. You probably don't need that much to run the operations. In the past, you do opportunistic buyback, but does it make sense to be a little more systematic going forward in terms of maybe not dividend, but more buybacks? And will paying down the convertible note that is, I think, due with the end of the year, is that a use of cash? And maybe just how do you think about capital structure of the company longer term?

Yes, Sidney, great questions there. So from a capital allocation standpoint, what we take a look at in terms of buybacks and in our history is that we've consistently returned -- if I look back into 2015, we returned about 45% of our free cash flow back for our shareholders. And that's something that we've consistently done. If you take a look at 2021, we returned 55% on the $100 million ASR. Now if you take a look at the period of time that we've done over the years, it's varied. It's not one particular quarter that we pick, but we have been consistent as part of our overall capital allocation strategy.

So that's something that we monitor, but it's also balanced, as you mentioned on the convertible note, in overall kind of capital allocation structure and how we want to look long term. So on the convertible note side, we're deeply reviewing all the alternatives that might avail themselves to us. So we'll go through and continue to manage that. But it also just kind of really lines up to what we want to do long term for capital allocation, which also includes looking at M&A opportunities. So it's a balance. So we are committed to returning capital to shareholders. We will continue to look for M&A, and we're actively managing the convertible notes.

And your next question comes from the line of Mehdi Hosseini with SIG.

Yes. Just -- Keith, I want to go back to your guide for product revenue in '22. Did you mean to imply that you're guiding to 20% year-over-year growth or $172 million of product revenue for this year. Is that what you were implying?

Yes. We're basically -- there's the reports that are out today. And from what we see right now from a supply perspective, we're in alignment. Our forecast look very consistent with what's out there. I think the number is a little bit higher than that, marginally than the $172 million. I think it's in the $180s million or so. That's out there. But that's just really based on a current outlook for what we see from supply.

Got you. That's fair. Because you're starting the year with a very strong momentum, given your guide for March, I just want to make sure I didn't misunderstand you. So you're conservatively $180-ish million with a 60% to 65% gross margin, right?

That's accurate. And clearly, those numbers for the top line, it's just very much a supply outlook. It's not a demand outlook. We are extremely pleased with what we're seeing for DDR4 and DDR5. We're very pleased with that.

Okay. And one follow up for Luc. How should I think about the adoption of DDR5 by notebook -- commercial notebook versus server? Do you think this is going to be driven by servers first and then notebook? Or is that a different dynamic you see? And just as a follow-up to what you see, where do you see the mix of server DRAM in terms of DDR4 versus DDR5 exiting this year?

So to the first question, I think maybe -- to the first question, the vast majority, all the demand for DDR5 market share is coming from servers. The introduction of buffer chips for products put into client price of customers as far as we see, is going to come later, not this year.

So most -- 100% of the demand for the DDR5 buffer chip is when it comes with servers. And again, talking about buffer chips, not the memory themselves because there's no buffer chip in the client.

The second question had to do with the mix of DDR4 and DDR5. The report from IDT and we agree with that, is the crossover in volume happening towards the middle of 2023 or second half of 2023. This is still our view. We think that the crossover in revenue is going to happen before that just because of the ASP dynamic when we move from one generation to the next.

And your next question comes from the line of John Pitzer with Crédit Suisse.

Congratulations on the solid results. Look, I just want to go back to the supply issues and make sure that I fully understand. To what extent are these sort of direct issues that you're having that's preventing you to shift to full demand versus kind of issues you see out there in the ecosystem? Perhaps around server substrates or whatever that's kind of holding back full potential this year.

Yes, John. The issues we see are direct issues. They're coming directly from our supply chain, our own supply chain. We work with them. We've not seen what happens in other markets where we will be constrained by all the components that would go into the same system. We have not seen that yet. So all of our supply issues are stemming from our supply channels, the supply chain. And again, we're working with them to alleviate any disruptions as we go every week.

And Luc, just relative to those direct issues, do you feel as though you're any better or worse positioned than competition? How do you think about your share as you navigate through some of these supply constraints?

Difficult to say, I think everyone in buffer chip is on those that experienced supply chain challenges, us as well as our competitors. So I think we're all suffering from that. I would just say that last year, we grew our revenue 26% and the market only grew 5%. So we managed to work these supply issues quite well. Again, I think one of the challenges we had, as we said earlier, is the lack of visibility going into -- beyond 90 days from now.

And your next question comes from the line of Kevin Cassidy with Rosenblatt Securities.

I think you had mentioned that second half '22, you expected the supply will improve. And was it from your last comment that you say you're expanding your number of suppliers? Is that why you're confident that second half '22 will be better?

Maybe it was a little -- I mean we're not going to expand our number of suppliers. We have the same suppliers. We think things may improve towards the end of 2022, in the second half of 2022, just because there are other markets placing demand on the same type of technologies that we think might pick up. But again, as we keep repeating, unfortunately, we have very little visibility beyond the coming 90 days. But again, we're not going to add supply or new suppliers, we're going to use the same suppliers. We just believe that things might ease up towards the end of the year.

Okay. Maybe if I move to a different topic of CXL adoption. Can you give us a feel for how many engagements you're talking to? Maybe for the IP, how many licensees there are? And what do you think the percentage of server CPUs will be using CXL?

So it's a great question. There's different types of engagements we have with CXL. The first type of engagement we have is through the sale of CXL controllers. And with the acquisition of PLDA, we really have great momentum there. So this is IP sale. So people buy our controllers and integrate the controllers into the chips that are going to be CXL capable down the road. So that's the first, I would say, wave of revenue that we have from CXL.

This acquisition allows also us to develop our own CXL chips. We are in full swing in these developments, and we are targeting the CXL 2.0 standard which is going to hit the market in 2023. And with those, we engaged with the same players in the ecosystem as we had for our buffer chip.

And finally, we are also talking to cloud service providers about CXL-specific chips that will hit the market a bit later. So we have arrays of different technologies and products that we are introducing to the market, the main one being memory expander that will hit the market in 2022 based on CXL 2.0.

And your next question comes from the line of Mark Lipacis with Jefferies.

A question I have is on your M&A strategy going forward. To what extent would you expect your -- the M&A that you make going forward be like pure IP companies for the sake of increasing your IP portfolio versus IP companies for the sake of delivering a product and selling a product also versus kind of a semiconductor product kind of companies? If you could share your thoughts on that idea, that would be great.

Yes. Thanks, Mark. The first objective with M&A is obviously to generate profitable growth and to scale the business to the extent that we can find the right targets, we will be looking for semiconductor companies or carve out semiconductor companies in the types of markets we are serving today.

The other type of companies that we're looking at is the type of things that we did with PLDA and AnalogX last year, where both complement our IP portfolio in the same ecosystem and we secure IP that we're going to use in our own products and again, with end view of increasing our product revenue growth going forward.

As you know, it's difficult to predict M&A. It takes two to dance, so we have to find the right partner. But the idea here is really to generate growth with semiconductor products, either by buying directly semiconductor product companies or carve-outs or buying IT companies that allow us to accelerate our own development or semiconductor products.

And we have a follow-up question from Mehdi Hosseini with SIG.

Just a quick follow-up for Keith. Can you give us an idea how we should think about increase in OpEx in '22 versus '21?

I think from an OpEx perspective, just take a look at some of the guidance that we had put forth for the current Q1 quarter. So we will have and continue to have some additional costs at least in Q1 from the perspective that we have some seasonal payroll costs that will just kind of add to the natural run rate, it's tax -- [variable tax that got reset].

And then also, we're continuing to hire. We're looking to, as Luc talked about, expand our product portfolio. So there's hiring that we have. And that will be slightly incremental throughout the course of the year.

Got it. Okay. And if I may, just a follow-up for Luc. Just looking at your silicon IP revenue mix, which has also benefited from a recent acquisition, I want to better understand how I should think about the diversity of your customer mix. And how is the revenue mix between the actual high value volume manufacturing at your customer side versus continued R&D budget? So kind of a two-part question and just trying to better understand how are you able to scale those acquisitions.

Thanks, Mehdi. The nice thing about the silicon IP business is that, especially in the current environment, it's much less immune to supply chain, and that's a good thing to have. If we look at our silicon IP business across interfaces, controllers and security, the range of customers we have is much broader than what we have for our semiconductor products.

The vast majority of our design wins are in the data center and edge, and as we said in our prepared remarks, the silicon IP business allows us to go into other markets. So we have a fairly large number of design wins in 5G, in IoT. We have a lot in government driven particular by our security IP technology, and in automotive.

So we have a much broader range of customers and customer reach with our silicon IP just because there's so many more products that can use just a piece of technology that we provide. The silicon IP business is not growing as fast as -- the silicon IP market is not growing as fast as the semiconductor product market, but we are challenging our teams to grow this business double digits, which is higher than the market growth. So it's a good contribution to both our margins and our revenue growth going forward.

(Operator Instructions)

We have a follow-up question from John Pitzer with Crédit Suisse.

Luc, just real quick, there were a bunch of questions around ASPs in the memory buffer business as you move to DDR5. I'm a little bit more curious if you can talk a little bit about server DRAM content and kind of how you're levered to the growth in content. And I guess, to the extent that street models have product revenue up this year is about as much as last year, I'm kind of curious of your view is the overall underlying market. Do you think it shows accelerating growth versus kind of that mid-single-digit number you saw in calendar year '21 because of this accelerating content growth?

Yes. John, thanks for the question. It's always a bit difficult for us to correlate with the DRAM market precisely because of the dynamic on the capacity on the modules, but also the volatility on pricing on the DRAM. The way we look at it is that people are recycling their DDR4 designs into DDR5 as demand for data and demand for speed is going up, and this is what drives the demand for new generations of products. And as we do that, we accelerate or we improve our footprint within the market.

And that's how we can generate the 20-x percent of growth, which is not directly correlated to the DRAM growth. It's more correlated to our footprint being better from generation to generation, if that answers your question.

No, that's helpful. And then I know it's difficult beyond 90 days, but is there any way to figure out to what extent -- what revenue could have been or could be this year without some of the supply constraints? Are you talking about 4% to 5% deficiency of supply demand? Or are you talking about something that's more in the double-digit line?

John, I think it's an -- number in that regard, it's a little bit of challenge to quantify. There's a lot of dynamics, pricing changes and whatnot. But I think really the takeaway is the demand is very strong. And -- we are getting some great design wins in DDR4 and DDR5, and that actually is very exciting. But trying to put that big number around it, we -- it's obviously a larger number, it is kind of how I'd phrase it. But it's something that is a little bit more challenging just from all the pricing dynamics and other things.

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 Luc Seraphin.

Thank you, everyone, who has joined us today and for your continued interest and time. We look forward to speaking to you again soon. Have a great day. Thank you.

Thank you. This now concludes today's conference. You may now disconnect.