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To: Goutam who wrote (14871)	10/18/2000 12:19:00 PM
From: AK2004	Respond to of 275872

Goutama he downgraded intel Message 14608116 "Our long-term rating has been cut from Buy to Accumulate." Regards -Albert

To: Goutam who wrote (14871)	10/18/2000 1:13:45 PM
From: milo_morai	Read Replies (2) \| Respond to of 275872

<font color=orange>Counting cost of Rambus partnership By Tom Foremski in San Fransisco Published: October 18 2000 07:25GMT \| Last Updated: October 18 2000 07:41GMT When Intel teamed up with Rambus in 1996 it seemed to be a marriage made in heaven. But the relationship hassoured, costing the world's largest chip manufacturer hundreds of millions of dollars and several high-profile chip problems. Intel's support of the high-speed Rambus memory chip technology is directly related to the recent cancellation of its Timna microprocessor, the recall of more than 1m PC mother-boards in May and the scrapping of about 1m PCs a year ago. "We made a big bet on Rambus and it did not work out," Craig Barrett, Intel chief executive admitted. "In retrospect, it was a mistake to be dependent on a third party for a technology that gates your performance." But back in 1996 the partnership seemed to make sense. Intel was producing ever faster microprocessors but PC memory chips could not keep up. It did not matter how fast the microprocessor became since PC performance would be constrained by trailing memory speed. Enter Rambus, with memory chips that produced a sharp improvement in memory speed. Given Intel's powerful position in influencing the direction of future PC systems, Rambus-based memory chips were widely expected to dominate memory chip markets, producing a royalties bonanza for the tiny company. Unfortunately, memory chip makers were hit by falling chip prices, profits were under pressure and paying royalties to Rambus was the last thing chip makers wanted to do. In addition, making Rambus-based memory chips was difficult and expensive, with yields of good chips low at first. Intel stepped in with money and marketing muscle. Two years ago it paid $500m for a 6 per cent stake in Micron Technology, the top US memory chip maker, to help it make Rambus-based chips. And three months later it invested $100m in Samsung, the leading Korean chip maker, to help it produce Rambus memories. In addition, Intel tried to push the overall market towards Rambus with plans for microprocessors that would only work with that type of memory. Despite its best efforts, the promise of Rambus's technology led to a nightmare for Intel. First of all, the first PC boards for Rambus contained a serious flaw. According to some estimates, this forced leading PC makers to withdraw as many as 1m systems last September, just weeks from launch. Intel was then confronted by the problem of chips that would allow cheaper memories to be used with its Rambus-only microprocessors. This led to the recall of about 1m PC boards earlier this year, and a profits warning related to the costs involved. Then, more recently, Intel scrapped its delayed low-end Timna microprocessor after customers showed little interest in a low-cost PC microprocessor that required expensive Rambus memory chips. Rambus, meanwhile, smarting from the poor support from memory chip producers, and PC makers which favoured slower but cheaper types of memory, decided that rival memory chips violated its patents and filed the first of a series of patent infringement lawsuits. This began in January with a lawsuit against Hitachi and grew to include complaints against virtually every leading memory chip producer. It triggered several counter-suits. Intel became disgruntled with the company's strategy. "We hoped we were partners with a company that would concentrate on technology innovation rather than seeking to collect a toll from other companies," Mr Barrett said. It is clearly a relationship Intel is unhappy with but one it cannot change easily. Mr Barrett said the company has a contractual obligation specifying that its Pentium 4 microprocessor, due for release next month, should support Rambus memory. Yet Rambus memory chips significantly raise the cost of PCs - never a good thing especially with Wall Street already concerned about slowing PC markets. Intel is trying to remedy this with rebates to PC makers to make up for increased manufacturing cost, further adding to the expense of its Rambus support. However, there is something of a silver lining for Intel. The company's investments in Micron and Samsung have produced a generous return as the shares have appreciated significantly in value. And it stands to profit from sales of its higher margin server microprocessors - a product area that is not dependent on the use of Rambus based chips. news.ft.com Ouch! Milo Morai