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

To: richard surckla who wrote (40526)	4/21/2000 12:28:00 AM
From: Dave B	Read Replies (1) \| Respond to of 93625

Nintendo will not have to pay royalty fees to use NEC DDR-II Ram; this will help them release the Dolphin at a mass market price. Sony must pay royalty fees to Rambus for the RDRAM used in the PS2, which in turn is added into the retail price of the PS2. Anyone have any idea how much the royalty on two RDRAM chips is? Here's a guess that should be the ceiling of the royalty: * 128M RIMM = $560 retail currently = 8 RDRAM chips * 2 chips would therefore be $140 (which is waaaaay high since this is the retail price and the $560 includes the cost of putting it all together in a RIMM). Since Sony buys in bulk, their price is probably half this worst case, but let's stay with $140. * 2% of $140 would be $2.80 royalties for the RDRAM * On the logic chip side, let's assume the worst -- a 5% royalty rate. What's the cost of the chip in volume? I really have no idea, but let's say $50 (assuming the price of the entire unit is $399 and the have to add in all the other hardware, this doesn't seem unreasonable to me). * 5% of $50 would be $2.50 royalties for the logic chips. * This gives an extremely conservative guess of $5.30 total royalties. Realistically, it's probably more like $3 to $4. * Up to $5.30 in additional cost is hardly going to make the Platstation II non-competitive against the Nintendo box. Especially since the Nintendo box will be coming out a year later with memory running at exactly the same speed as the RDRAM (and there's still an open issue whether DDR-II can burst as efficiently as RDRAM -- important for graphics). * Also the price of RDRAM will be significantly lower in a year so the royalty will probably be less than $2 (my wild-ass guess). The royalties are not a pittance, but there are probably plenty of other areas where they could cost-cut more. Anyone have any better assumptions? Dave