after trial revenues....
Rambus Reveals Plans To Collect Royalties From Chipset
Makers
By Steven Fyffe, Electronic News
Nov 17, 2000 --- 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 trade show in Las Vegas this
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, who 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, which 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. “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.”
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 the 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,” Handy said. “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, principal analyst at InQuest Market
Research.
“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’ plan 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 declined 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,”
Kanadjian said. “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 on Monday will give Rambus the chance for some
positive publicity at last, Kanadjian said. |
