Hi jhg in kc; Answers: (Business reasons motivating memory makers.)
(1) "Who and what are the memory industry?" Largely Hyundai, Samsung, Micron, NEC, Hitachi, Fujitsu, Toshiba, Mitsubishi. They make DRAM chips.
(2) Can you state 3 real-world business-based reasons why this industry would walk away from INTC/RMBS for AMD?" A better way of asking the question is to ask for reasons why these companies would like to walk away from Rambus. They really don't have a bone to pick with Intel, and Intel will tag along later this year. Anyway, here are some issues, (and these ignore things like the fact that the memory makers are still angry at Intel):
(a) RDRAM has high royalties. Nipping this in the bud is a good long term move. Profit margins at memory companies are usually way up or way negative, but on the long term, they don't average much more than the Rambus 2 or 3% royalty. No business prefers to pay royalties.
Partly in order to save on royalty costs, the Taiwanese are quietly readying a PC133 SDRAM alternative.
techweb.com
(b) RDRAM has very little differentiation. Companies hate having to be forced to all produce essentially identical goods, as this means automatic commoditization, which is generally bad for profits. That is why all those SDRAM compatible SGRAMs have different features, for instance, and why the VC (virtual channel) people are making their chips a little different from the usual. Contrary to what they are saying, the memory companies love having a fragmented memory market. That's why they are always fragmenting the market. The only counter to this is that they are also afraid of being left out of the next big commodity. But if you read what the memory makers are saying themselves, they are by and large trying to avoid commodity markets.
Practically the definition of a commodity chip is a chip that every one else is making. You might as well place a "Rambus" imprint on the top of the chip instead of a "Samsung" or "Micron":
The overall goal of the Direct Rambus validation program is to provide a known launching point for component supplier to verify their designs, and system companies to obtain specification compliant Rambus devices.
rambus.com
Directory for top-ranked DRAM suppliers
Fujitsu has shifted its DRAM focus from PC main memory to more application-specific memories. ...
Oki has phased out commodity DRAMs, and its memory business is now centered on application-specific memories ...
"We've been preparing for two years to have a product mix that's no longer homogenous," said Bob Eminian, a vice president at Samsung ...
techweb.com
Motorola Inc.'s Semiconductor Products Sector told customers last week that it will withdraw from portions of the "commodity" SRAM business and concentrate on developing embedded memory and "NetRAMs" aimed at the networking market.
techweb.com
"With that said, you can see where the relationship between Hitachi and UMC may be beneficial. But, we have made a strategic decision to move away from commodity memory. Our customer base needs us to be more flexible."
techweb.com
Even though IBM has largely retreated from the commodity DRAM market, it has been refining embedded-DRAM technology to make it more cost effective and believes embedded DRAMs will eventually be necessary to enhance the performance of logic circuits.
techweb.com
Renewed pricing pressure in the commodity DRAM arena is causing a schism in Japan's semiconductor market, as chip makers here wrestle with their long-term commitment to PC main memory.
Four of the country's top DRAM manufacturers-Fujitsu, Hitachi, Mitsubishi, and Toshiba-are significantly reducing their exposure to the volatile PC-memory sector
techweb.com
(c) RDRAM is more expensive to produce per unit. Most of the cost is in the capitalization of the testers. This cost is why Intel has been having to make investments in the memory houses. (Read how the memory houses redirected those Intel investments to DDR support here: ) The memory companies don't like having any more capital invested in their production than they have to. A complete industry conversion to RDRAM would be pretty expensive, they don't want to go there when they can use their current lines to make a product with higher profit margins.
Direct RDRAM costs about 50% more to manufacture than an SDRAM of equal density, but Rambus expects to reduce that premium to 10% to 15% by the end of 2001.
techweb.com
Samsung, denied that prices are artificially inflated, and said there is no great difference between the RDRAM selling price and its cost of production. "I've heard that 20 percent figure from Intel about 10 times," said Jay Hoon Chung, manager of DRAM marketing for Samsung Electronics Co. (Seoul, South Korea), currently the largest supplier of RDRAMs. "But 20 percent is not probable by our point of view. We expect the price gap will be 1.5x by the fourth quarter."
techweb.com
(d) RDRAM has a very sensitive process in terms of yield and binning. Industry rumors are that instead of getting a set percentage per wafer, you end up with whole wafers that have to be thrown away. This makes getting the process spread from line to line more of a chancy operation than usual. One might think that this would all average out, but the problem is that it doesn't. This means that companies have trouble figuring out how many good chips they will be able to produce in the future. This makes it tougher to make contracts with memory consumers. In addition, there is the chance that if another company figures out how to make the parts with a decent yield, your company will be the odd man out, and will suffer accordingly.
Even Samsung Semiconductor Inc., the major volume supplier of Direct Rambus DRAM to the PC market, conceded that yields of the most desired 800-MHz Rambus version "are still too low." Bob Eminian, vice president of marketing at the San Jose company, said Samsung expects to devote up to 20% of its product mix to Direct RDRAM this year, but that only 20% of Rambus chips now shipping are binned out at 800 MHz. "And that's a factor of yields," Eminian said.
ebns.com
However, persistent difficulties with Direct RDRAM manufacturing yields
techweb.com (March 1999)
"The tight tolerances of the Rambus memories mean that yields are sensitive to slight process changes," Tabrizi [vice president of strategic marketing at Hyundai] said, adding that he expects Rambus DRAMs to account for less than 5 percent of the overall DRAM market in 2001
techweb.com
The current Direct RDRAM technology developed by Rambus, in conjunction with Intel, has proved formidable to implement, causing component and system delays that have forced Intel to consider backup plans due to RDRAMs' low yields and high test and packaging costs.
techweb.com
(e) RDRAM has much more tightly controlled time and current parameters. Like the above, this is something suffered by all the companies, so you would think it would average out. But it means that you are more likely to get in disagreements with your consumers over whether a batch of shipped parts met their specifications or not. The industry rule is that if the parts don't meet their specifications, the maker has to eat them. Having very tight specs means that there is a greater chance of this. In fact, despite the fact that the Camino fiasco was the biggest QC problem in the DRAM industry for the last 10 years, it is still not public knowledge exactly what caused it. Who wants to operate under that sort of confusion? You could change which supplier you buy your "sand" from, and the next thing you know, your yield has dropped to zero.
To counter the high prices of Rambus parts, Intel said it increased TDP timing specs-a measure of the maximum time a signal can travel from a memory controller through a system's memory modules-from 1,500 picoseconds to 1,560 ps. The extra 60 ps should help increase the yield of RIMMs as they are tested, and will allow several module makers vexed by the tight timing parameters to get qualified "overnight," said Pete Mueller, engineering manager for the platform components group at Intel.
techweb.com
(f) Because RDRAM requires such tight measurement and process control, it makes modern production control more difficult. One of the basic principles of manufacturing is to minimize the amount of stock that you have in your production line at any one time. The reason for this is that if you discover that a process step has been botched, minimizing that amount of stock will minimize the amount of material that you have to scrap. With regular SDRAM, they can test the intermediate steps to determine when their process has screwed up. But RDRAM is a lot more dependent on process variation, so this makes it more likely that they will end up with a problem with, for instance, transistor doping, that doesn't show up as defective parts until the final assembly. This means that there is a larger amount of stock at risk of scrap. One of the things that people outside the industry don't realize is how much variation there is between transistors from different batches built on the same nominal process. Extra sensitivity to this causes an decrease in the predictability of production.
Getting Rambus over the hump will take more than just Intel. It will take enthusiasm by the DRAM vendors, and belief that they can make a profit on Rambus rather than losing more money. They are doing enough of that already.
techweb.com
Okay, Ali, Scumbria, help me out here. Surely there are some more reasons...
-- Carl
Bonus reading. Rambus talking about the graphics (oops) market:
To keep up with these performance demands, a number of mainstream PC graphics controller vendors will be delivering Rambus(TM) based graphics controllers in the 2000-2001 time frame.
rambus.com
Four DDR based game type graphics chipsets are now shipping or announced. Where are the RDRAM systems?
Dataquest (one of the two companies who's currently relatively optimistic on RDRAM shipments for 2000) being very wrong about RDRAM shipments, back in December 1998:
Targeted at the massive PC main-memory market, Direct Rambus solutions will represent 5% of the total DRAM market by 1999, 30% by 2000, and about 60% by 2001, according to Dataquest.
techweb.com |
