controlling the supply, yeah...
From the Rambus brief of 9/9/03. Here is how the conspiracy was born:
4. The DRAM Manufacturers Acknowledged – By
Undertaking Extraordinary Efforts To Slow Or
Block RDRAM's Market Acceptance – That It Is
Intel's Decision making, Not JEDEC Standardization,
That Most Strongly Influences Marketplace Success.
1548. The DRAM manufacturers were well aware of Intel's power to create a defacto industry standard in selecting the RDRAM device. They also recognized that JEDEC standardization of a competing device would mean nothing if Intel did not change its course, and they knew that “Intel will not change course unless Rambus fails.” (RX 870 at 1). Finally, the manufacturers recognized that they could not affect Intel's decision without concerted action; they “need[ed] some united strategy.” (RX 808 at 2). As a result, both before and after Intel announced its selection of RDRAM, Intel faced resistance – organized, concerted resistance -- from the DRAM manufacturers.
1549. There has been substantial disagreement among the parties about the relevance in this case of evidence of concerted action by DRAM manufacturers that was intended to limit or prevent the marketplace success of RDRAM. While such evidence may not be dispositive of any material issue, it is relevant for at least four reasons.
1550. First, as noted above, it tends to show that it is Intel's selection, not JEDEC's standardization, that influences marketplace success for a DRAM device or technology.
1551. Second, it tends to rebut Complaint Counsel's argument that Rambus' motivation in asserting its patents in 1999 and 2000 should be viewed with suspicion because the assertion of those patents came after RDRAM had supposedly failed to compete on the merits because of its (allegedly) inherently high manufacturing costs.
1552. Third, it tends to place in context the testimony of the executives and employees of DRAM manufacturers whose words and deeds are reflected in the evidence in question. Their interest in a finding that RDRAM failed on its merits, rather than as a result of collusive action, is likely to be affected by their participation in such action.
1553. Finally, while Complaint Counsel necessarily have focused their efforts on advancing the allegations made in the Complaint, this Court has a broader responsibility to the Commission and the public. If this Court receives evidence of collusive action by competitors that may have had the effect of reducing consumer choice, raising prices, or
eliminating a superior technology, it is appropriate to bring that evidence to light. See FTC Act, 15 U.S.C. §§ 43, 45.
1554. With these points in mind, the Court has considered the evidence presented and finds reason to believe that the DRAM manufacturers: (1) were alarmed by the possibility that Intel's selection of the RDRAM would lower their profits and cause them to lose control of future DRAM design and implementation; (2) joined together in various
consortia with the intention of impairing or blocking the successful marketplace launch of RDRAM; and (3) agreed to steps that resulted in lower production and higher prices of RDRAM, thus limiting and ultimately preventing RDRAM's success.
1555. In September 1996, for example, Hyundai executive and SyncLink
Consortium chairman Farhad Tabrizi wrote an e-mail entitled “Emergency request for help!” that expressed a concern that “the real motive of Intel is to control DRAM manufacturers . . . .” (RX 778 at 1). According to Mr. Tabrizi, Intel's actions would give it “control of DRAMs and other CPU makers. We will become a foundry for all Intel
activities and if Intel would like and desires to do business with us then we may get a small share of the their total demand.” (RX 778 at 1).
1556. Mr. Tabrizi concluded his September 1996 e-mail by 1556. Mr. Tabrizi concluded his September 1996 e-mail by writing, “I urge you to
please educate others and get their agreement to say 'NO TO RAMBUS AND NO TO INTEL DOMINATION.'” (RX 778 at 1).
1557. Mr. Tabrizi sent this email to one of his competitors, Jim Sogas at Hitachi, for comments. (Tabrizi, Tr. 9035). Prior to trial, he had testified that he was trying to get agreement from other DRAM manufacturers to say “no” to Rambus and “no” to Intel domination. (Tabrizi, Tr. 9038). At trial, however, he claimed that he could not recall sending the e-mail to other DRAM companies. (Tabrizi, Tr. 9037-38). 1558. In December 1996, at a SyncLink Consortium meeting attended by various manufacturers, Mr. Tabrizi stated that “[m]any suppliers are paranoid over the prospect of a single customer, e.g., Intel, having control of market. We can't resist such a possibility
individually. We need some united strategy.” (RX 808 at 2).
1559. At that same meeting, the assembled manufacturers agreed to hold a meeting of DRAM manufacturer executives in Japan in January 1997. (Tabrizi, Tr. 9041). Prior to the January 1997 meeting of executives, Mr. Tabrizi sent an email to other DRAM manufacturers that stated that the “Intel decision to go on a Rambus route was pure political
and domination and control over the DRAM suppliers and not technical.” (RX 802 at 3; Tabrizi, Tr. 9041-42). He then urged a unified effort to prevent Intel from gaining “control”: “As I have mentioned many times before, Intel does not make DRAMs, we do. And if all of us put our resources together, we do not have to go on this undesirable path.
The path of control and domination by Intel.” (RX 802 at 3). He pleaded with the DRAM manufacturers to “stick together on this matter.” (RX 802 at 3; Tabrizi, Tr. 9042-43).
1560. At the January 1997 meeting of DRAM executives, Mr. Tabrizi warned the assembled executives that if Intel succeeded in making RDRAM the next generation memory device, “DRAM manufacturers would loose control of specification and the gross margins will decline.” (RX 849 at 44). Mr. Tabrizi conceded at trial that it was his view at
the time that if Intel's selection of Rambus did not change, the gross margins of DRAM manufacturers would decline. (Tabrizi, Tr. 9048).
1561. Tabrizi's January 1997 presentation also warned that if Rambus became the next generation memory solution, “ALL DRAM COMPANIES WILL BECOME FOUNDRIES for a single source CPU manufacturer.” (RX 849 at 44). The phrase “single source CPU manufacturer” was a reference to Intel. (Tabrizi, Tr. 9046).
1562. Micron engineer Terry Lee participated in the January 1997 DRAM executive meeting; his notes reflect that Siemens executive Dr. von Zitzewitz stated that Tabrizi's “[c]ontrol concerns are realistic.” (CX 2250 at 2; Tabrizi, Tr. 9047-48). The notes also state that Dr. von Zitzewitz was “[d]isappointed with some statements accepting Rambus
II. 0.1% royalty would have been OK. . . . The bottleneck of a small company is bad. Rambus is not acceptable.” (CX 2250 at 2). Mr. Lee's notes were later made available to all members of the SyncLink Consortium (which was renamed the “SLDRAM Consortium” around this time). (Tabrizi, Tr. 9050; RX 855 at 1).
1563. After the January 1997 DRAM executive meeting, Mr. Tabrizi set up an e-mail “reflector” so that the DRAM supplier executives – ostensibly fierce competitors – could communicate among themselves via private e-mail. (Tabrizi, Tr. 9052; RX 938 at 1).
1564. Throughout 1997, 1998 and 1999, Mr. Tabrizi and others kept up regular communications about Rambus with their competitors, often sharing cost, production and planning information ordinarily maintained in confidence by true competitors. (Tabrizi,
Tr. 9053; RX 916 at 1; RX 1181 at 1; RX 1155 at 1; RX 2191 at 1-2; RX 2192 at 2-3; RX 1105 at 1; RX 1386 at 1; RX 1487 at 4).
1565. In February 1998, for example, Jeff Mailloux of Micron wrote an email to Mr. Tabrizi stating that Mr. Mailloux had spoken to a reporter for an industry publication called EE Times. (RX 1105 at 1). Mr. Mailloux stated that “I told him that at any density
and any process that is available in 1999, RDRAM is at least 30 percent cost adder for Micron,” and then encouraged Mr. Tabrizi to call the reporter with Hyundai's views. (RX 1105 at 1). Mr. Mailloux asked Mr. Tabrizi to “please visit me if I end up in jail. . . .”
(Id.).
courtesy of JA on TMF |
