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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: richard surckla who wrote (32437)	10/20/1999 10:01:00 PM
From: Don Green	Read Replies (1) \| Respond to of 93625

From Street.com via Yahoo??? SAN FRANCISCO -- For the past few years, Intel has handled its Rambus strategy like Procrustes, the Greek mythological figure who forced travelers to fit into a bed by stretching their bodies or cutting off their legs. Now the companies that Intel has invited into its Procrustean bed are steamed as they count the ever-increasing costs of Intel's Rambus initiative -- costs that some executives estimate in the billions. It's becoming more apparent that Intel is also finding it not so comfy in the Rambus bed it made. For Rambus chips to work requires not just a processor but a DRAM, a chipset connecting the two motherboards, and testing equipment, all of which need to configure with Rambus' radical technology. Interviews with executives and representatives from 12 companies that make these devices and machinery indicate frustration at Intel for driving the industry to spend huge sums of money on a speculative and problematic technology that may have been unnecessary. Farhad Tabrizi, vice president of strategic marketing and product planning for Hyundai Electronics, one of the top DRAM suppliers. "We have inventory of Rambus product that we can't sell. We have a loss of opportunity. Our revenues have been affected." For DRAM makers, the timing couldn't have been worse. For memory companies like Hyundai that prepared for a big Rambus launch, every wafer that went into Rambus is a lost sale. One DRAM maker, Samsung, said on Oct. 12 that it put all its Rambus production on hold. The Camino bug is causing problems for others, too. Five chip-equipment makers -- Advantest,Hewlett-Packard,Schlumberger have invested more than $500 million together to develop high-volume Rambus testers, according to Gary Fleeman, memory product manager at Advantest. "The reality is that no one has bought a lot of them," says Tom Newman. In addition, motherboard makers have been left with an estimated 1 million boards worth a total of $150 million that cannot be sold, according to one consultant who works with DRAM makers and who requested anonymity. Intel told Dell about the delay only three days before the scheduled Camino launch, says Dell technology strategist Jay Bell. By that time, Dell had mailed out reams of print catalogs featuring Rambus systems. "It is a rarity for Dell to be out there marketing products that we can't deliver on," says Dell spokesman Tad Druart. Because Dell's reputation depends on the ability to deliver orders, "we hate the inconvenience it is causing some customers," Druart says. Not everyone has been hit hard. Companies like Hitachiand/Micron that were leery of the Rambus product and waited to produce parts have actually benefited. The shift of production to Rambus by Samsung and Hyundai tightened the SDRAM market and helped raise prices higher than they would have been. Intel itself has invested heavily in the technology: undisclosed amount on chipsets and motherboards it has made for Rambus chips, and more than $600 million in investments in Micron, Samsung and Toshiba to woo those companies onto the Rambus bandwagon. Intel's long-term costs could run even deeper, in the erosion of the chip titan's reputation in the computer industry. "Part of this is a credibility. "Intel has been saying all along, 'Trust us. Don't worry.' " This isn't the first time that Intel has tried to push through a standard. In the early '90s, it embraced a memory standard called burst EDO, and Micron invested heavily in the technology. But in 1996, Intel switched support to the current standard, synchronous DRAM, which left Micron scrambling to make the change. The industry has now learned a hard lesson, the memory-chip consultant says. The next time Intel needs to prod DRAM and equipment makers, it may have to pay far more money in incentives and guarantees. This all puts Intel in a position where no industry leader wants to be, because from now on its efforts to set standards may be second-guessed by the herd. thestreet.com