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

To: unclewest who wrote (13992)	1/21/1999 5:40:00 PM
From: MileHigh	Read Replies (1) \| Respond to of 93625

Intel invests $100 million in Samsung to aid Rambus output By Anthony Cataldo EE Times (01/21/99, 9:40 a.m. EDT) TOKYO — Intel Corp. will invest $100 million in Samsung Electronics Co. to help accelerate the South Korean chip maker's production of Direct Rambus DRAMs. Following an investment in Micron Technology, the investment in Samsung marks the second time in less than a year that Intel has taken an equity stake in a DRAM company to ensure a reliable supply of the high-speed Direct Rambus memory devices, which suppliers are having difficulty producing in large quantities this year. Samsung and Intel have signed a letter of intent for Intel to acquire convertible bonds that can be exchanged for 1 percent of Samsung Electronics common stock. The deal is expcted to be approved by the boards of both companies next month, according to Samsung. “This investment continues our long relationship with Samsung, the world's largest supplier in the memory market segment,” said Patrick Gelsinger, vice president and general manager of the desktop products group of Intel (Santa Clara, Calif.), said in a statement issued by Samsung. “With this investment our goal is to help ensure an adequate supply of Direct RDRAM for the personal computer market segment over the next few years.” Samsung, which has reportedly been in discussion with Intel since early last year, greeted the investment with open arms. Like many DRAM vendors in Asia, Samsung is struggling to find ways to pay for new equipment for next-generation DRAM technology while the region's economic woes continue. More and more it is turning to foreign investors, which now own about 50 percent of Samsung Electronics, the spokesman said. “This is wonderful news because the market for Direct Rambus will increase this year and may radically increase next year,” said a spokesman for Samsung (Seoul, South Korea). “This is not just a matter of having a $100 million investment, it's a matter of being involved in an important market and with Intel.” Samsung will use the money to upgrade its Kiheung fabrication plant, near Seoul, the spokesman said. Like other DRAM manufacturers, Samsung needs to pour money into its lines to pay for new testing and assembly equipment for Direct Rambus DRAMs, which run at 800-MHz and are housed in advanced chip-scale ball-grid array packages. No new fabrication line will be needed, the spokesman said. Samsung is considered the most aggressive supplier of Direct Rambus parts, which are likely to show up in systems by the second quarter of this year after Intel introduces its first Direct Rambus-compliant chip set. While several companies in Japan and Micron Technology (Boise, Idaho) say they will wait to produce the parts in volume after they make die shrinks below 0.2-micron, Samsung intends to produce 72-Mbit Direct Rambus parts using 0.23-micron technology early in 1999. Many vendors are concerned that the high cost of producing the devices — by some estimates they may be 40 percent to 60 percent more expensive to produce than SDRAMs — will be too costly for the market to bear. Samsung plans to produce 500,000 72- and 144-Mbit Rambus chips a month in the first half of this year, and will expand production to 5 million chips a month by the end of the year. Samsung expects 30 percent of new PCs this year will ship with Direct Rambus. By next year more than 50 percent of systems will use Rambus, the company said. The spokesman said Samsung will continue to provide customers with other high-speed DRAM alternatives, such as DDR SDRAMs. Making big investments in DRAM companies is not new to Intel. Several years ago, Intel made a investment in Samsung's then-new fabrication facility in Austin, Texas to help pay for new equipment. And last year Intel made a $500 million equity investment in Micron that was tied to the development of Direct Rambus DRAMs.