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Samsung halts production of Rambus memory chips

Samsung, which has made more Rambus memory chips than anyone else to date, says the move is a result of Intel's decision to delay the 820 chipset.

Now that PCs using Rambus memory are delayed, Samsung has halted production of the new type of memory chips until the recent problems are solved.

Samsung, which has made more Rambus memory chips than anyone else to date, said that the suspension of manufacturing is a direct result of Intel's decision earlier this week to delay the release of its 820 chipset, the part that will allow Pentium III processors to "speak" to the next-generation memory.

Computers using the 820 and faster Rambus memory were expected this week. Recently discovered errata, or bugs, held up the release, which caught many by surprise. HP, for example, trotted out a PC with Rambus to reporters and analysts only a few days before the delay.

Although the suspension throws a wrench into Samsung's business plans, the problem is worsened by the open-ended nature of the delay. Some observers have speculated that the problem could be fixed in a month, but Intel has not estimated how long the problem might take to fix.

Samsung and other memory manufacturers pay Rambus royalties when they sell Rambus chips to computer makers. It's unknown how much Samsung's decision to shut off production will hurt Rambus revenues.

"The delay has got us concerned. We would very much like to see a new launch date," said Avo Kanadjian, senior vice president of memory marketing at Samsung, adding that the company will not resume production until a release date is set.

"Until the problem is fully understood, any fix is pure conjecture. We think that a quarter [three-month] delay is realistic, and a six-month delay is not out of the realm of possibility," wrote Ashok Kumar, semiconductor analyst with US Bancorp Piper Jaffray in a report yesterday. "Regardless of the cost and fix, both Intel and Rambus will find it hard to recover the credibility that they have lost by uncovering this problem so close to the announcement."

Samsung, of course, is not the only company hit by the delay. Computer companies have already designed and manufactured Rambus PCs, which can't be sold at the moment. Motherboard makers will have to also go back to the drawing board.

"We estimate that this snafu has cost the industry about $10 million. (100,000 motherboards at $100)," Kumar continued.

On what might be the only positive note in the Rambus saga these days, Kanadjian pointed out that the recent surge in price of standard computer memory has reduced the premium on similar Rambus devices. The price of Rambus memory has been a major complaint of PC manufacturers.