Technology News
Wed, 13 Sep 2000, 2:51am EDT
NEC Reaches New Licensing Agreement With Rambus on Memory Chip
Designs
By Iain Wilson
Tokyo, Sept. 13 (Bloomberg) -- NEC Corp., Japan's largest chipmaker, said it has
signed new licensing agreements to use Rambus Inc. computer-memory designs in
a broad range of products, heading off a legal dispute that's engulfed other
chipmakers who've refused to pay the U.S. company for its technology.
The agreement means NEC will pay royalties to use Rambus's designs in two of its
memory products. NEC will also work with Rambus to develop a newer form of
memory called 1066 MHz Direct RDRAM as part of a widening alliance and
extension of licensing agreements between the two companies, the companies said
in a statement distributed by Business Wire.
NEC will be able to proceed with plans to produce faster chips for high-capacity
workstations without fear of the same legal disputes Rambus has entered into with
chipmakers such as Hyundai Electronics Industries Co. and Micron Technology
Inc. For Rambus, the accord means most of Japan's major memory-chip makers
now pay royalties to use its designs.
``Japanese chipmakers have decided to take the opposite approach to the one
chosen by foreign chipmakers,'' said Yoshiharu Izumi, an analyst with UBS
Warburg LLC. ``Given the recent legal entanglements, licensing is a choice with
low risk.''
Rambus, which has more than 85 U.S. patents, said in July fiscal third-quarter
profit more than doubled on higher royalties. Revenue included $6.6 million from
royalties based on shipments of Rambus-based chips. The company's shares have
soared almost fivefold since Jan. 1.
Rambus shares fell 3.1 percent yesterday in regular U.S. trading before the
agreement with NEC was announced. NEC shares fell as much as 45 yen, or 1.6
percent, to 2,750 yen and were last down 15 yen to 2,780 yen.
Memory Design
Rambus's patents are used by companies such as No. 1 computer- chip maker Intel
Corp. to speed software applications. Still, Rambus's assertion that its designs speed
information from one chip to another in personal computers and video-game
consoles is a point of controversy among some chipmakers who say they've seen no
such speed gains.
NEC's agreement comes even though some chip manufacturers have balked at
making Rambus-based products, saying they're difficult and expensive to produce.
Other memory makers have been pushing alternative products to keep from having
to pay royalties.
Mountain View, California-based Rambus has turned to the courts to protect its
patents. The company said yesterday it is suing Hyundai Electronics and Micron
Technology in Germany and France for allegedly violating memory-chip patents.
Rambus has also sued Infineon Technologies AG, citing similar reasons.
Hyundai, the world's second-largest computer chipmaker, and Micron sued
Rambus in August in federal court in San Jose, California, alleging some of the
semiconductor-design company's patents are illegal. Rambus said in its statement
yesterday it sued Hyundai and Micron after negotiations to resolve the companies'
patent disputes ended and Hyundai went to court.
Production Plans
In Japan, Rambus has resolved the patent issue with three other chipmakers besides
NEC. Rambus settled a suit with Hitachi Ltd. in June after Japan's No. 1
electronics maker agreed to pay licensing fees. Rambus has also reached patent
agreements with Oki Electric Industry Co. and Toshiba Corp. without filing
lawsuits against them.
NEC said last month it had been in talks with Rambus for the past few weeks on
whether NEC is infringing Rambus patents and was seeking clarification of the
matter.
Tokyo-based NEC's licensing agreement with Rambus covers synchronous dynamic
random access memory, or SDRAM, and double data rate, or DDR, memory, the
companies said in their statement.
``NEC was quick to recognize the potential of Rambus as a technology partner,
and we've achieved significant successes as a result of our close partnership,'' Kanji
Sugihara, head of NEC Electron Devices, NEC's semiconductor unit, said in a
statement.
Dynamic random access memory, or DRAM, chips act as the main memory for
personal computers. Processor makers such as Intel and Advanced Micro Devices
Inc. compete in the high end of their business by offering chips that run at high
speeds. Memory makers in response need to increase the speed at which their
products can receive and transmit information.
NEC has said it is boosting production of 288-megabit memory chips using
Rambus's designs. By switching its focus to Rambus chips with larger capacity,
NEC may be betting lower capacity chips won't generate enough demand among
the current generation of personal computers and processors.
By March, NEC expects to produce 1.25 million units of the 288-megabit chips.
The company, which began producing the chips in small test batches in June, has
already begun production of 150,000 units a month. NEC will hold monthly output
of 128-megabit chips, which are also based on Rambus designs, steady at 1 million
units per month.
NEC is the largest DRAM producer in Japan and fourth largest in the world
behind Samsung Electronics Co. of Korea, Hyundai and Micron, according to the
Semico Research Corp. of Phoenix, Arizona.
Samsung, which has said it makes 80 percent of the world's supply of 128-megabit
chips, forecasts the market for chips based on Rambus technology will grow tenfold
in the next two years. Samsung expects RDRAM chips will represent 20 percent of
its memory chip production this year, rising to 40 percent by the end of 2001. |
