Intel to delay new chipset as Rambus reels
Intel cancels a planned Monday unveiling of a new chipset that would have enabled the first use of next-generation Rambus memory in PCs, sources say.
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"The Intel 820 launch will not happen Monday," said Jon Weisblatt, a spokesman for Dell Computer. The 820 "Camino" chipset is a package of chips necessary to use Rambus memory.
"Dell engineers have determined that the 820 platform is not production-quality ready," Weisblatt said.
Shares of Rambus dropped as much as 19 percent in midday trading today on news of last-minute technical problems and a negative report from BancBoston Robertson Stephens analyst Dan Niles.
As first reported by CNET News.com yesterday, a serious glitch involving the previously delayed Rambus memory is sending shock waves through the industry.
The problem could force PC makers to throw away critical parts of new high-end computers or face the prospect of shipping potentially faulty machines. One analyst estimated that hundreds of thousands of computers are affected.
Perhaps more important for consumers, sources say Intel's interim solution also limits Rambus machines to 512MB of memory, half the capacity of conventional systems.
The problem stems from how much memory the computers can use, Peter Glaskowsky, an analyst with Microdesign Resources, said yesterday. The computers built so far have three slots in the motherboard for Rambus memory, but now Intel has said that systems should only have two, he said.
Intel plans to discuss the status of the new 820 chipset Monday, one source said, but won't actually ship it until October 25, the scheduled launch date for Intel's new "Coppermine" Pentium III chip.
Compaq Computer's Jim Cortese confirmed the problem. Compaq had planned to announce support for the 820 on Monday and actual computers on October 25, but now those plans have been delayed indefinitely, he said.
Compaq planned to use Rambus in its high-end DeskPro line and its workstation models. "Clearly, those are going to be delayed," Cortese said. He couldn't immediately say how many of the systems already have been built.
Hewlett-Packard, which earlier this week announced new workstations and business PCs using Rambus, declined to comment on the effect of the problem. "We do plan on using Rambus. When it gets announced, HP will be there to support it," a spokesman said.
IBM representatives weren't immediately available for comment.
Unsurprisingly, Micron Electronics--which decided earlier to avoid the 820 for the time being and use a competing chipset from Via Technologies--was more talkative. Micron will announce its new systems Monday that the company says will have comparable performance to Rambus systems.
News of the chipset delay didn't surprise Glaskowsky. "They [Intel] don't like announcing when they don't have systems to ship," he said.
"Very late in the game"
The last-minute glitch had analysts scratching their heads.
"This is way late in the game, to be doing this the day before," said Warburg Dillon Read analyst Seth Walker. He believed there will be fixes available that won't require manufacturers to scrap all the motherboards they've made so far.
In the long term, Rambus still will win out, Walker said. "At the end of the day, Rambus will get done, in our opinion, by the second half of 2000. We think it will become a mainstream technology," he said. He estimated that Rambus-equipped PCs costing as little as $1,300 will be available by the end of next year.
Cahners InStat analyst Steve Cullen said Intel should have caught the problem sooner. "The problem is that the certification program was supposed to make sure this wasn't going to happen," he said.
Intel shares opened down 3 percent and dipped in morning trading. Intel is one of the chief proponents of Rambus technology, a long-term solution to the recurring problem of making sure computers can keep up with ever-faster CPUs.
Intel declined to comment on the issue today.
Stock downgraded
Niles downgraded Rambus stock today, reducing it from "buy" to "long-term attractive." He also suggested the planned Monday debut of Rambus PCs could be delayed, describing Intel's 820 "Camino" chips that enable Rambus memory as "buggy."
Rambus will first arrive in expensive, high-end systems, but "PC pricing pressure is driving growth much faster in the low end than high end, which is reducing Rambus's market opportunity," Niles wrote.
"We believe that most PC [manufacturers] now plan to adopt Rambus in the first quarter of 2000 at the earliest," Niles said, projecting that in that quarter between 1 and 2 percent of PCs will use Rambus. "Rambus infrastructure will take longer to build than anticipated," he said.