Toshiba to pay SDRAM royalties to Rambus

Toshiba to pay SDRAM royalties to Rambus
By Will Wade, EE Times
June 22, 2000 (7:12 p.m. EST)
URL: http://www.eetimes.com/story/OEG20000622S0045

SAN MATEO, Calif. — Toshiba Corp. will pay royalties to Rambus Inc. for intellectual property Rambus claims is used in synchronous DRAMs. Analysts were divided over the significance of the deal in establishing Rambus' RDRAM patents as fundamental to mainstream SDRAM technology.

"We think our patents are pretty fundamental," said Geoff Tate, Rambus' chief executive officer, adding the company believes that most of the SDRAM chips now available are based on Rambus technology and therefore liable for royalty payments to the company.

"We don't have a huge legal department," Tate said, "and we can't pursue claims against everybody. We will go company by company and present them with our detailed analysis of why we think they are violating our patents. We believe it is likely that most, if not all, will determine that they are infringing upon our patents."

Toshiba already holds a license for Rambus DRAM (RDRAM). Under this latest agreement, Toshiba has agreed to pay royalties for its SDRAM, double-data-rate (DDR) DRAM and FCRAM chips, as well as memory controllers for these parts. Most Rambus licensing agreements call for royalty rates of 1 to 2 percent per chip for RDRAM devices, and Toshiba has agreed to pay an undisclosed, but higher, rate for these other memory formats.

"This is certainly a positive for Rambus," said Nathan Brookwood, principal analyst for Insight64 (Saratoga, Calif.). "At least one company that might have fought off Rambus' claims has decided to join Rambus. However, this might prompt other companies to fight against Rambus even harder."

SDRAM is one of the cornerstones of the high-tech industry. With billions of chips shipping every year, even a tiny percentage royalty fee could generate huge revenue for Rambus. But the commodity memory market is characterized primarily by price competition, and raising the unit price even a fraction could dramatically shift the balance.

Tate said that Rambus has presented i ts claims to several other major memory vendors, and he expects most of them to at least carefully evaluate his company's patents. Rambus already has an ongoing patent infringement claim against Hitachi Ltd., which is being pursued separately in U.S. courts, by the International Trade Commission, and in courts in Germany.

In the Hitachi suit, Rambus claimed Hitachi had used Rambus' fundamental technology in both its SDRAMs and in its SH microprocessors.

Ron Bechtold, vice president of Hitachi's DRAM business unit, said the Toshiba decision will not have any impact on Hitachi's legal battle and reiterated his company's position that its SDRAM technology does not infringe on any Rambus patents. "This does not change our stance," he said. "We will remain on the same course of action."

Sherry Garber, memory analyst for Semico Research Corp. (Phoenix), noted that Toshiba has publicly declared its intention to de-emphasize its role in the DRAM market. Lower DRAM production would mean fewer royalties, especially if the company never produces the DDR DRAM format that is included in the deal. "I don't believe this is as significant as it might look at first glance," she said. "The Japanese companies are not as big in the memory market as they used to be, and I don't think it is a coincidence that Rambus is going after them first."

In contrast, Rambus has not broached the subject of SDRAM royalties with Samsung Electronics, the world's largest memory company, a Samsung spokesman said. "I would be surprised if Rambus approached us on this issue because we are one of the only companies shipping RDRAM in volume," he said. "That would be like shooting themselves in the foot."

Samsung expects that 20 percent of its total output will be RDRAM by the end of the year. However, PC OEMs have not been placing huge orders for the chips, which are priced much higher than SDRAM, and this has limited Rambus' royalty revenue from RDRAMs. Several analysts and memory industry executives suggested that this strategy i s a means for Rambus to increase its revenue through alternative means, until RDRAM volumes increase.

With the company claiming that SDRAM controllers also use Rambus intellectual property, Intel Corp. could find itself being asked to pay royalties for its upcoming Timna microprocessor, which features an integrated memory controller. Intel has a licensing agreement with Rambus, but the terms remain confidential and a company spokesman would not speculate on whether the world's largest chip company would pay royalties to Rambus for SDRAM technology. Intel has been a major backer of Rambus, and its upcoming Willamette processor is designed to work solely with RDRAM chips, making a move to extract new royalties from them perhaps even more unwise than antagonizing Samsung.

The Toshiba deal calls for the Japanese company to pay retroactive royalties back to at least April, when Rambus first presented its claims, and perhaps even further back. Rambus CEO Tate expects to see similar deals over the next yea r or so. "This could have a huge short-term upside for us," he said.