Rambus patent claims burrow to heart of semiconductor industry
By Mark Hachman
Electronic Buyers' News
(06/17/00, 10:01:56 AM EST)
ebnews.com
SANTA CLARA, Calif. - Once a curiosity, then an upstart, and more recently a controversial player, Rambus Inc. emerged Friday as a company that could prove to be the tollbooth of the semiconductor industry.
Analysts expressed utter shock at Toshiba Corp.'s concession to Rambus' claim that it essentially owns the fundamental rights to the synchronous DRAM memory interface used by the majority of the semiconductor industry. Indeed, Toshiba's decision could have a profound impact on a wide range of companies, according to observers, as Rambus prepares to conduct similar licensing deals with memory and logic firms alike.
Essentially, Rambus, Mountain View, Calif., has successfully laid claim to a fundamental tenet of computing. All logic devices manipulate data in memory, the majority of which are not embedded but consist of discrete chips using a synchronous memory interface.
The list of companies that may have to line up at Rambus door could include the entire DRAM industry -- which research firm Dataquest Inc., San Jose, is projecting will record revenues of $36 billion this year -- as well as any company that designs products that directly interface to synchronous memory. That includes makers of PC chipsets, graphics chips, embedded controllers, I/O hubs, and networking components, among others.
"Our patents are pretty fundamental," said Rambus chief executive, Geoff Tate, during a press conference Friday to announce Rambus' next-generation memory interface technology for the consumer market. "I think it's likely to say that most companies will violate these patents."
Rambus will initially seek out royalties from DRAM vendors, Tate explained, because a large number of DRAM chips will typically connect to a single chipset, providing a lucrative target. "But the non-main memory TAM [total available market] is about the same as the main memory space in TAM," Tate said.
Tate said between five and 10 companies are "in active discussions" with Rambus, either evaluating the patents in question or negotiating similar licenses of their own. Representatives for Toshiba were unavailable for comment.
"We're reviewing with individual manufacturers what patents we have, what patents they have, and why they require a license," Tate said. "It may take a couple of months."
The license is restricted to a synchronous memory interface and its many offshoots which dominate the DRAM industry today. The patents that Rambus is asserting, and the license Toshiba signed, do not apply to older fast-page-mode or EDO memory.
Tate conservatively estimated the Toshiba royalties would generate $10 million per year in royalties for Rambus. According to Dataquest analyst Jim Handy, the royalty revenue from Toshiba alone could be substantially higher, upwards of $15 million. The royalties Rambus will charge Toshiba are retroactive to April of this year. In 1999, according to Dataquest, Toshiba recorded $1.5 billion in revenues from DRAM alone, a 6.5% market share that placed it sixth in the market.
Under the licensing agreement Rambus strikes with all of its partners, the licensee is responsible for tallying and then reporting the amount of Rambus chips sold during the quarter. Under what are typically five-year agreements, Rambus then records the revenue during the following quarter. |
