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Intel impatient with memory chip output

Following deals with Samsung and Micron Technology, Intel offers to help fund Toshiba's production of the new memory chips it covets.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
Brooke Crothers
3 min read
Intel has offered to provide Toshiba with funds to boost next generation memory chip production, further evidence that Intel and Rambus are struggling to get this new technology accepted by the beleaguered memory chip industry.

Intel is talking with Toshiba about an investment in that company to boost production of Direct Rambus DRAM memory chips, according to the Nihon Keizai Shimbun, a major Japanese business daily.

An Intel spokesperson would not comment, stating only that Intel enters into private discussions with many companies.

The Japanese report says large scale production of the new memory chips is delayed because some manufacturers are balking at the high cost of manufacturing and one analyst confirms this and adds that at least one manufacturer is balking at the licensing fees. This is all happening amid a depressed memory market and capital investment cutbacks industry wide.

"[One maker] is now negotiating for a lower licensing fee," said Ashok Kumar, an analyst with Piper Jaffray in Minneapolis.

"I think the expectations are that the takeoff of [Rambus] DRAM will be much, much slower than expected. Intel is hedging their bets...It makes sense from an economic standpoint since die [chip] cost is 30 percent more...and the higher licensing fee associated with it, on top of the higher manufacturing cost, is going to make the audience for the chip minimal [for now]," he added.

Other industry sources familiar with situation say that "because of the cyclical nature of the memory market, there might not be enough investment?[Intel] wants to ensure a good supply of high performance [Rambus] DRAM."

But others say that it is almost a certainty that the industry will eventually move to the Rambus architecture. "Certainly, 1999 is going to be a year requiring a lot of management," as Intel and the industry begin to move to the new architecture, "but Intel has made it very clear that they want to make it the main memory in PCs and will commit to it for the next five years," said Jim Handy, an analyst at market researcher Dataquest.

Memory manufacturers are seeking stability with new standard. [They] have been jerked around by new memory [standards] almost every year" for the last five years, he added.

Because Intel backs Rambus, it is aggressively supporting the technology already. Intel has invested in South Korean memory giant Samsung and Micron Technology in order to spur production of Rambus memory.

Handy says that Intel is essentially offering incentives to Toshiba and Samsung. "If they started mass production, they would receive rewards," he said.

The Rambus memory system helps to ameliorate the growing speed disparity between computer microprocessors and memory. As processors have gotten faster and more powerful, it's been harder and harder for a computer's memory to keep it supplied with the data it needs, so the CPU ends up doing the electronic equivalent of twiddling its thumbs.

Rambus has friends in high places
Rambus can transfer data at about twice the speed of today's high-speed memory called "SDRAM." While other companies have created high-speed memory designs, what sets Rambus apart is its friends. Intel has effectively designated Direct DRAM as heir-apparent to SDRAM. Similarly, Advanced Micro Devices, Compaq Computer, Dell Computer, and National Semiconductor's Cyrix arm have chosen Rambus as their memory standard for their future microprocessors.

Rambus royalties could be significant considering that the worldwide DRAM market was worth $15 billion in 1998.

Dataquest predicts that Rambus will have 10 percent or more of the market by the end of this year and expand to well over half the market by the end of 2002.

Intel's Camino chipset, due later this year, will enable computers to take advantage of memory built around Rambus' designs but Piper Jaffray's Kumar says Intel will support the current memory standard also.

PC makers have Rambus-based PCs slated for mid-year, say various sources. Despite these models, however, vendors won't push these extremely hard, said John Joseph, semiconductor analyst with NationsBanc Montgomery Securities. Instead, they will focus on their bread and butter PCs. As a result, a surplus may appear.

In a separate development, Hewlett-Packard (HP)and Rambus today announced that HP has licensed Rambus technology and "intends to offer Rambus memory subsystems to a variety of HP system divisions," according to a statement.