Racom currently buys FRAM from Ramtron and Rohm. It also has licenses with Rohm, Toshiba, Samsung, and Fujitsu. To my knowledge, only Ramtron and Rohm are in commercial production of FRAM and Racom gets a preferred price from Rohm. Racom gets a royalty on the 32K FRAM Ramtron sells to Cubic Corp.
I believe the next company to enter commercial production will be Fujitsu, but I'm sure someone will dispute that. Other companies that will be bringing commercial production of FRAM on-line will be Hitachi (less than 1 yr) and SGS Thomson (about 2 year). And of course there are several companies on the Y-1 side of FRAM production that say they are close (e.g., NEC, MOT) but I do not know if they are in commercial production.
I believe the big play for Racom is that they stand to gain a royalty on all contactless FRAM cards sold in the US regardless who manufactures the chip. This of course is in addition to their own initiatives which, for now, are focused on closed systems.
To my knowledge, Rohm has the best production capacity of FRAM. What their limits are, I don't know.
At this level, Racom is BUY. I expect 2Q to be positive and if Racom lands another license which is in the rumor mill, 3Q will also be positive. This gives them a some time to get a large contract lined up for 4Q. Also, because of their low market cap and contactless royalty position, in my book, they are a takeover candidate. |
