Will Rambus Wage Litigation Battle Against Intel?
August 14, 2000 (TOKYO) -- Rambus Inc. of the United States has recently attracted
substantial attention in today's IT-related news media.
Rambus is the company that developed the high-speed, memory-interface "Rambus"
technology.
The Rambus interface is used for Rambus DRAM (RDRAM) and its subsequent product,
Direct RDRAM.
Recent articles and reports can be summarized into three areas that involve the company:
(1) the schedule to convert PC main memory into Direct RDRAM appears to be delayed
drastically; (2) Rambus is expanding upon patent licensing agreements with many memory
makers for the technology used in SDRAM and double data rate (DDR) SDRAMs; and (3)
Rambus has been making efforts to enhance the data transfer speed of DRAM memory,
upgrading synchronous clock frequencies for Direct RDRAM and introducing multi-level
signaling technology.
New Rambus-related litigation will likely be initiated, judging from a series of movements
around Rambus Inc. This means there are concerns that such companies as Intel Corp.
may face litigation over Rambus-related products. The reasons are explained in the
following paragraphs.
Rambus Inc.'s First Priority Is Stockholders' Interests
A glimpse of Rambus' business strategy can be seen through its comments when patent
licensing agreements for DDR SDRAM or other technologies were announced. The
company has set a royalty rate for DDR SDRAM higher than that for Rambus-related
products, claiming that DDR SDRAM-related products are in direct competition with
Rambus-related products. The company's stockholders wouldn't condone it if Rambus set
a lower royalty rate to transfer its technology to rival products, the company explains.
This means that Rambus Inc. acted to protect stockholders' interest, which is natural. For
an IT maker like Rambus, it is a natural course to keep "promoting technology
development and activating the market." But, it appears as though Rambus only intends
to maintain its stock price and stockholders' interests, and that it will announce future
technologies one after another, as shown by (3).
Rambus has left most of the practical work -- of disseminating the use of Direct RDRAM
as PC main memory -- to other companies. Announcing concepts doesn't form an active
market unless companies that support those concepts are participating.
Rambus' attitude has remained unchanged from the beginning. It was Intel that adopted
the Direct RDRAM as the next-generation main memory for PCs. Also, it was Intel that
designed the 820 chipset for PCs that incorporate Direct RDRAM as main memory.
It has been known, since early stages, that the performance of computer systems using
the 820 chipsets is unstable. Rambus, however, remained quiet to questions such as: if a
inexpensive chipset can handle signals shaped finely, or a cheap
four-layer-interconnected motherboard can transfer signals securely.
As for PCs that adopt motherboards and main memory originating from a variety of
makers, a problem of "poor congeniality" is inevitable. It's important to afford a sufficient
margin to solve that problem. However, Rambus, wasn't able to show sufficient technical
data to its customers.
Rambus Offers Tough Conditions to Intel
Rambus believes that systems using Rambus technology should be developed by each
maker licensed to use the technology. That signals the same to Intel.
Both companies announced in December 1996 that they would jointly develop Direct
RDRAM as the next generation main memory for PCs. The basic cooperative relations at
the beginning were; (1) Rambus will possess the basic part of the intellectual property,
including patents; and (2) Intel is only one of Rambus' licensees.
Rambus attached conditions that Rambus will cut its maximum royalty rate for memory
makers from 2.5 percent to 2.0 percent at the stage when Intel starts shipping Direct
RDRAM-compatible chipsets, and that although Intel holds a purchase warrant of 1
million shares of Rambus' stock, it can execute the right only after its Direct
RDRAM-compatible chipsets have surpassed 25 percent of its total chipsets for PCs. And
thus, Intel was offered incentives to develop chipsets that support Direct RDRAM.
Rambus and Intel built up cooperative relationships to spread the use of Direct RDRAM.
Yet, the business relationship of both companies has been somewhat distant.
Intel has been concentrating on the development of the 815 chipset to support the PC133
SDRAM, which competes with Direct RDRAM. As a result, its ratio of
Direct-RDRAM-compatible chipsets is not as high as 25 percent.
Also, Intel has released benchmark-test results reporting that the performance of a system
with PC133 SDRAM is higher than that with Direct RDRAM, under the condition of using
the same microprocessor.
Rambus to Seek Patent Licensing Contracts for Chipset and System Makers
Intel says Direct RDRAM is the only viable solution for the next-generation PC main
memory.
On the other hand, it is reported that Intel is developing a chipset featuring support for
PC133 RDRAM, along with the 850 chipset (development code name: Thehama)
supporting Direct RDRAM, for Pentium 4, which comes after the Pentium III. Therefore, it
might again be a possibility that the shift of PC main memory to Direct RDRAM will be
delayed again.
What kind of tactics will Rambus adopt to give priority to stockholders' profits under
these circumstances?
It will be difficult for Rambus to enter into a dispute with Intel over the PC133
SDRAM-compatible chipset for the Pentium 4. A more reasonable approach would be to
spotlight DDR SDRAMs that compete with Direct RDRAM, rather than to stir up disputes
about the PC133 SDRAM, which has been already accepted by PC users. Also, the scope
of Rambus' basic patent for DDR SDRAM covers not only memory elements but also
memory controllers, or chipsets, according to Rambus.
As is widely known, Intel is developing a chipset that supports DDR SDRAM for servers
featuring multiple processors. If Rambus angers Intel over this issue, it is possible that the
DDR SDRAM-compatible chipset will be its first target. The wind is also favorable for
Rambus, because many memory makers have signed patent licensing agreements with it.
(The licensing agreement with Hitachi Ltd. includes contracts for memory controllers, too.)
Rambus may require Intel to enter into patent licensing agreements for systems using
DDR SDRAM. (Sega Enterprises Ltd.'s Dreamcast game machine was one of the disputes
with Hitachi.) It doesn't matter whether Intel chipsets are being used or not. In the
contract with Intel, Rambus said it won't require licensing fees for PC makers or users. But,
it isn't clear about the cases for workstations and servers.
IBM and other companies have reportedly decided to adopt DDR SDRAM for
workstations and servers. That may cause some legal disputes.
Patent disputes over Rambus' DDR SDRAM technology may involve chipset and system
makers. When Hitachi concluded the patent licensing agreement with Rambus, it said that
although its licensing contract has been executed, Hitachi did not recognize Rambus'
patents.
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