6/22....Patent Settlement Sends Rambus Stock Soaring
By Eric Auchard
NEW YORK (Reuters) - Rambus Inc. (NasdaqNM:RMBS - news) on Thursday said computer memory supplier Hitachi Ltd. (6501.T) had agreed to a patent licensing deal, settling patent litigation between the two and putting added pressure on other chip makers to strike similar royalty deals with Rambus.
News of the deal sent Rambus shares soaring 43 percent to as high as 138-3/4 in furious after-hours trading on Thursday, up from a close of 97-1/8 in regular session trading on the Nasdaq stock market, adding to a 4-1/2 point gain on the day.
The agreement settles patent infringement suits filed by Rambus against Hitachi in U.S., German and international courts and sets the stage for Rambus to reach patent royalty settlements with other chip makers, a Rambus executive said.
Speak your mind
Discuss this story with other people.
[Start a Conversation]
(Requires Yahoo! Messenger)
``We are hoping that other companies will follow,'' Avo Kanadjian, Rambus' vice president of worldwide marketing, told Reuters in a phone interview following the announcement.
He said other chip makers had initiated patent royalty talks with Rambus when they learned of the Santa Clara, Calif.-based company's suit against Hitachi and studied Rambus' patent claims. He declined to name the companies involved.
Last week, one of those companies, Toshiba Corp. (6502.T) was the first company to break ranks and settle with Rambus.
Rambus stock has rocketed since Friday when the company announced that Toshiba had agreed to license its technology. Shares have gained roughly 133 percent in value in the past week and now trade above their all-time high of 117-3/4, set in March.
``The Rambus patent is very, very strong. We think other companies are going to follow, and make it difficult for other companies to resist,'' ING Barings analyst Peter Wolff said.
Wolff said the cost of the royalty payments by Hitachi and other chip makers would likely be passed through to customers and that the impact would not fall disproportionately on any one company.
``As long as all the manufacturers are given equal treatment, then it's not a factor for any one firm,'' Wolff said.
Rambus designs, but does not actually build, memory chips. Rather, it licenses its technology to chip makers for use in their own memory products. Rambus counts 95 U.S. and foreign patents issued to over 30 semiconductor companies.
As part of the deal announced Thursday, Hitachi agreed to pay Rambus an up-front settlement fee, as well as quarterly royalty payments, Rambus said. Further financial terms were not disclosed.
The license agreement involves patents for fundamental aspects of high-speed memory interfaces invented by Rambus that are now being implemented in Hitachi's rival memory products.
Hitachi makes both Synchronous Dynamic Random Access Memory (SDRAM) and Double Data Rate (DDR) Synchronous Dynamic Random Access Memory (DDR SDRAM).
These memory technologies are offered by Intel Corp. (NasdaqNM:INTC - news), VIA Technologies (2388.TW) and other chipmakers to multiply the speed at which computers and other electronic devices handle data calculations.
In a statement, Rambus said the Hitachi deal would make royalty rates for DDR SDRAM and related controller devices greater than the Rambus Dynamic Random Access Memory (RDRAM) rates, which Rambus sees as a rival product.
``Since DDR was really invented by Rambus, we feel a higher royalty is justified,'' he said.
Kanadjian said that Hitachi's existing (single data rate) SDRAM would be charged a lower royalty rate because Rambus does not see that product as competitive with its own double data rate RDRAM.
Other memory makers that support DDR SDRAM include Micron Technology Inc. (NYSE:MU - news), Samsung Electronics Co. Ltd. (05930.KS), Hyundai Corp. (11760.KS), Infineon Technologies AG (IFXGn.DE) (NYSE:IFX - news), NEC Corp. (6701.T), Mitsubishi Corp. (8058.T) and Nan Ya Technology Corp., a unit of Formosa Plastics (1301.TW).
Without naming names, Kanadjian stressed that not just memory but also makers of the controllers that interface with memory chips could be affected by his company's patent claims, including dozens of the industry's largest chip makers.
Industry analysts project that Rambus-based memory now represents 10 percent of the worldwide memory market. By 2002, that percentage should grow to around 40 percent, according to forecasts, as the market transitions from the current SDRAM standard to the faster RDRAM-based memory. |
