Rambus patent lawsuit backfires on shareholders

Share price drops 30 percent on speculation that a key court ruling may go against the chip IP company

Shares of Rambus, which owns intellectual property for chip-making technology, plummeted on Thursday amidst speculation over an impending lawsuit.

The shares closed off $11.26 (£7.87), or 32 percent, at $24.09 (£16.83), after a published report led investors to speculate a case between Rambus and Infineon Technologies is moving in Infineon's favour.

The report, published on Wednesday by Electronic News Online, cited judicial sources who said a partial summary judgement would limit the scope of what Rambus could include in the trial, to Rambus' patents on DDR and SDRAM memory.

On Thursday morning a technology update from investment bank SG Cowen also said that the ruling had sided with Infineon, saying Rambus' patents only covered the multiplex bus in SDRAM and DDR. Infineon does not use the multiplex bus.

Rambus is suing Infineon and a number of other chipmakers, including Micron Technology and Hyundai, over patents to memory technology commonly used in PCs. SDRAM is the currently the standard PC memory, while DDR (Double Data Rate) DRAM is a high-speed memory that directly competes with Rambus' RDRAM.

Rambus does not manufacture chips itself, but depends on licensing its patented technology for revenues. If Rambus were unable to demand payments for DDR and SDRAM memories, it would have to depend on RDRAM, which has so far failed to take off.

Among Rambus' allies is Intel, which is promoting Rambus memory for use with its high-end processors.

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