Rambus slashes royalty rate for SDRAM customer

Rambus slashes royalty rate for SDRAM customer
By Jack Robertson, EBN
July 13, 2001 (1:39 p.m. EST)
URL: http://www.eetimes.com/story/OEG20010713S0051

Rambus Inc. for the next year will allow a "major (synchronous DRAM) licensee" --- believed to be Samsung Electronics Co. --- to make single reduced quarterly payments instead of paying royalties, company officials revealed Thursday in the conference call with financial analysts.

Bob Eulua, vice president and chief financial officer, declined to identify the licensee getting relief. Analysts quickly tagged Samsung, the largest global SDRAM producer, as the beneficiary. Samsung officials could not be immediately reached for comment, but in the past U.S. officials have referred all licensing questions to the Korean headquarters, which is closed for the weekend.

The Samsung SDRAM licensing agreement with Rambus allows the firm to stop making royalty payments if any major competitor is found by a responsible court not to have infringed the patent. This fact was disclosed in the Richmond, Va., federal court trial that found Infineon Technologies AG hadn't infringed the Rambus SDRAM patents.

Rambus' Eulua said that under the renegotiated SDRAM license agreement, the unnamed chip maker will make single quarterly payments in lieu of royalties based on its synchronous DRAM sales in each of the next four quarters. He didn't identify the payment amount but conceded in questioning that "it is reduced" below the expected level of SDRAM and DDR shipments of the firm.

Danny Lam, chip analyst with Communications and Computing Reports, New York, said even if Samsung isn't the chip firm getting the SDRAM royalty relief from Rambus, the Korean company should be able to claim the same deal under its "most favored nation" clause granting it any lower rates that Rambus gives any other licensee. The "most favored nation" clause in the Samsung licensing pact was also revealed during the Infineon trial.

Lam said it is likely other Rambus SDRAM licensees also have "most favored nation" safeguards, which are common in royalty agreements. That could trigger m ore demands by Rambus licensees to get the same reduced single quarterly payment relief, he added.

Even before the Infineon trial verdict Kenji Tokuyama, president of Elpida Memory Inc., told EBN last February that the Hitachi-NEC joint venture, wanted to renegotiate its synchronous licensing agreement because major rivals --- Hynix Semiconductor, Infineon, and Micron Technology --- had an unfair cost advantage by refusing to pay SDRAM royalties to Rambus.

Eulua of Rambus confirmed that the firm has had discussions with its other SDRAM and DDR licensees in the wake of losing its patent infringement suit against Infineon Technologies this spring in the Richmond, Va., federal district court. "We are willing to listen to any win-win propositions" from licensees, he told analysts.

Rambus President David Mooring updated the litigation timetable for the firm's patent battles in the U.S. and Europe.

An Italian appellate court is expected to rule in another several weeks on Rambus request for a preliminary injunction against Micron SDRAM and DDR shipments in that country, after a lower court rejected the plea.

A German court is expected to rule this month on Rambus patent infringement suit against Infineon, and will hold hearings on Oct. 5 on similar suits against Hynix Semiconductor and Micron. The Micron suit seeking to invalidate the Rambus synchronous patents is slated to begin Oct. 29 in federal court in Wilmington, Del.

Rambus has appealed its adverse verdict in the Richmond, Va., federal court trial, but no decision is expected until next year.

Yesterday, Rambus revealed it spent nearly $9 million during the second quarter on legal costs stemming from the many lawsuits it was involved in.