Rambus Wants You!
Firm reveals plans to collect royalties from chipset makers
electronicnews.com
By Steven Fyffe
Chipset makers will be the next ones up against the wall once Rambus Inc. has dispensed with the last remaining memory makers resisting its campaign to collect royalties on SDRAM and double data rate (DDR) memory chips.
Rambus wants all chipset makers including Intel Corp. to start paying royalties on any device that interfaces with an SDRAM, DDR or direct Rambus DRAM (RDRAM) chip, a Rambus executive revealed in a candid interview with Electronic News at the Comdex tradeshow in Las Vegas last week
"We still have to license other controller manufacturers," said Avo Kanadjian, vice president of worldwide marketing at Rambus. "We are hoping that over time our category of licensees will grow bigger. All controller manufacturers also need to be licensed."
Rambus is currently embroiled in a messy three-way legal battle with Micron Technology Inc., Hyundai Electronics Industries Co. Ltd. and Infineon Technologies AG, which all say they shouldn't have to pay royalties on SDRAM and DDR. They accuse Rambus of subverting the Joint Electron Device Engineering Council (JEDEC) process, when the company kept its patents on SDRAM secret while attending JEDEC meetings intended to establish an open industry standard.
Samsung Semiconductor Inc. and Elpida Memory Inc. recently relented and inked licensing deals with Rambus covering SDRAM, DDR and associated memory controllers or chipsets.
"I would say that the negotiations with Samsung were difficult, but at the end of the day we came to an agreement that will end up being a win-win agreement," Kanadjian said.
The latest move to demand royalties from chipset makers was foreshadowed earlier in the year when Rambus sued Hitachi Ltd. over the SDRAM memory controller it had sold to Sega Enterprises Ltd. for its Dreamcast game console. Hitachi signed a licensing deal with Rambus soon after its customer Sega was dragged into the legal proceedings.
"The logic is there," said Steve Cullen, principal analyst at Cahners In-Stat Group in Scottsdale, Ariz. "They established that point when they got the license from Hitachi."
Chipset licensing could be a lucrative sideline for Mountain View, Calif.-based Rambus, Cullen said.
"Rambus has said all along that the royalties on memory controllers are higher than the royalties on DRAM. The controller chips are potentially the bigger cash drain in the long run."
Avo Kanadjian, vice president of worldwide marketing at Rambus
That is probably why Infineon, which produces a lot of memory controllers, is kicking back so hard at Rambus royalty claims in court, Cullen said.
Rambus' runaway patent claims could extend even further than just chipsets to ASICs programmable logic and graphics chips, according to Jim Handy, chief analyst at San Jose-based GartnerGroup Inc.'s Dataquest unit.
"If Rambus' patents hold, then they are going to have a reason to collect royalties not only from anybody who manufactures SDRAM, DDR or RDRAM, but also anybody who makes a controller or ASIC that talks to one of those chips," Handy said. "That's a pretty big part of the semiconductor market. There are an awful lot of people that need to look at what Rambus has got and what they want to do about it."
"They are making the same statement that anybody else who has a strong patent portfolio states. Rambus has warned everybody that everybody is within their reach."
Part of the rationale behind financial firm Morgan Stanley Dean Witter's high valuation of Rambus is the company's potential for big future royalty revenues.
But the wider Rambus casts its royalty net, the greater the possibility that it will hit a snag, said Bert McComas, founder and principal analyst at InQuest Market Research, based in Gilbert, Ariz. "The more lawsuits they take on, the higher the probability that somebody will fight it successfully," McComas said. "They are looking at every conceivable context for a lawsuit. In doing so they are going to test every conceivable argument and if four or five arguments are lined up, it's highly possible that they will lose one."
Rambus' scheme to collect royalties on chipsets could give Intel a competitive advantage, considering the companies' joint history, Handy said. "Intel owns part of Rambus; I think they are in a good position that way," Handy said. "I would believe you if you said Intel was sheltered from paying royalties on chipsets because of their special relationship."
"There's reason to believe that Intel is in favor of Rambus taking control of the marketplace, no matter what (Intel's chief executive officer) Craig Barrett said to the Financial Times," Handy said.
An Intel spokeswoman said it would be a "career-limiting move" for her to comment on this story.
Despite Barrett describing Rambus' licensing tactics as "toll collecting" in a recent interview with the Financial Times , Rambus and Intel are still on good terms, Kanadjian said.
"We have had our ups and downs, but we believe that Intel remains committed to Rambus and the launch of the P4 (Pentium 4), and I think that a lot of comments we have read in the press recently may have got 'Rambus' and 'RDRAM' mixed up. Some people are using them interchangeably. In this case I really believe there was some confusion between Rambus and the RDRAM supply chain, and I'm disappointed that nobody went back to the interviewee and asked."
The launch of the P4 will give Rambus the chance for some positive publicity at last, Kanadjian said. |
