Shares of Rambus rose more than 25 percent today to close at just above $300 as the controversial memory designer said that two more major
manufacturers have passed tests to produce Rambus memory.
Both Hyundai and Infineon
have passed validation tests to
manufacture computers around designs from Rambus. The completion of the
tests mean that there are now five memory manufacturers qualified to make
Rambus memory, or RDRAM, which is used in high-performance PCs containing
Intel processors. All five are expected to deliver 10 million RDRAM chips
by the end of the quarter, the company said.
Market analysts, however, say that the stock surge can be attributed to speculative trading.
The surge is but the latest event in one of the semiconductor market's
more polarizing companies. Rambus designs high-speed, next-generation
memory. Although chips
based around its designs can deliver higher PC performance, several product
snafus in 1999 delayed the introduction of Rambus-based PCs.
even contributed to lower-than-expected revenues at the end of last year for Dell, according to several Wall Street analysts. Besides the delays,
several memory makers and PC companies complained about the high cost of
The stock slid to the $80 range by September and October. Meanwhile,
several vociferous critics of Rambus have stated that a
different, cheaper type of memory--called Double Data Rate DRAM or DDR
DRAM--would supplant Rambus as the dominant form of high-speed memory in
Then, in February, Rambus began to rally on the strength of a spate of
positive news. Sony reiterated that it will use
Rambus memory in its PlayStation 2 game console, which comes out March 4 in
Japan, while Intel said it will create chipsets for using Rambus memory
with its forthcoming Willamette processor for desktops.
Intel also said it would invest $250 million in Infineon to manufacture
"We've seen somewhat of a delay on RDRAM (but) we don't see a role for DDR
on the desktop," Pat Gelsinger, vice president of the Intel Desktop
Products Group said recently. "For the desktop, Rambus is here and the
price and availability are being corrected."
Sony's decision has been known for
at a glance
HQ: Mountain View, CA
CEO: Geoff Tate
Annual sales: $43.4 Million
Annual income: $8.7 Million
Market cap: $4.7 Billion
Date of IPO: May 1997
Rambus message boards
over a year, while Intel's announcement
was widely expected. Additionally, Intel said that several servers using
its chips, including its first 64-bit Itanium processors, would use regular
memory and even DDR DRAM instead of Rambus.
If anything, optimism may come from the fact that some of the worst events
may be behind the company. IDC estimates that Rambus will account for 11
percent of memory shipped this year while DDR DRAM will constitute 10
By contrast, Jim Handy at Dataquest said that the volumes of Rambus would account for 16 percent of the total memory shipped in 2000 and 53 percent of the total by 2002.
Other analysts attributed the surge in part to speculative trading in the shares. Over the long term, Rambus's fortunes don't look great.
"No one is working on Rambus (PC) designs," Bert McComas, principal analyst at InQuest Market Research, who has been critical of the company.
Nathan Brookwood, principal at Insight 64, reiterated the view somewhat. Since the Intel Developer Forum earlier this month, Rambus has had an apparent growth path, but not a wide one.
Although Intel's Willamette chip will be paired with Rambus memory in performance PCs in 2001, this will constitute only a fraction of the total
computer market, Brookwood said.
"(Rambus) doesn't make it in servers, and it
doesn't make it in low-end PCs," he said.
Further, AMD will pair its Athlon processor with DDR DRAM, rather than Rambus.