Rambus' patent warfare

New lawsuit continues Rambus' efforts to grab revenues from PC memory market -- whether its own memory format is adopted or not

Infineon Technologies has become the latest target of US-based Rambus, which has been seeking to exact licensing and royalty payments for the manufacture of common PC memory technologies.

Munich-based Infineon -- formerly Siemens Semiconductors -- is a giant in the semiconductor market. The new lawsuit shows the scale of Rambus' ambitions in the intellectual property area, according to industry observers. The suit was filed in the Richmond, Virginia district court last week, Rambus has confirmed.

Rambus' new lawsuit covers patents for synchronous dynamic random access memory (SDRAM), a standard component in most PCs. Rambus has already reached royalty and licensing settlements with Oki Electric, Toshiba and Hitachi for double data rate (DDR) memories and SDRAMs, but has not yet established a legal precedent in the courtroom. The company has also sued Sega over technology in its Dreamcast gaming console.

Industry observers say Rambus appears to be aiming for the biggest game in its hunt for intellectual property revenues. "They've already picked off a couple of Japanese companies and Infineon is one of the bigger [chip makers]," said Andrew Norwood, senior analyst with GartnerGroup. "Its better to pick them off one by one like that. It's much easier to win that way."

Rambus is in a difficult position, according to experts, because it must rely on third party manufacturers -- such as the companies it is suing -- to make its products. For a time Intel exclusively endorsed Rambus' Direct Rambus (RDRAM) format for use with next-generation microchips such as the Pentium 4, but has recently muddied the waters by announcing a Pentium 4 chipset that will support SDRAM.

In order to protect its situation, Rambus may need to ensure it can harvest revenues from non-Rambus formats, observers said. The company may also be trying to make RDRAM look more attractive than DDR DRAM, a direct competitor, by making DDR DRAM more expensive to manufacture.

At the moment RDRAM is significantly more expensive than DDR DRAM, although some testers say it is not significantly faster.

"It's self-preservation," said Richard Gordon, principal analyst for the semiconductor group of Dataquest, a unit of GartnerGroup. "If [RDRAM] doesn't take off as a technology they're basically dead in the water. It doesn't help that Intel is giving mixed signals, that was a very strange move. It didn't give the industry the sense of direction it was looking for."

Patent lawsuits such as Rambus' could become even more of a fixture of the semiconductor scene than they are today, as the balance of power begins to shift towards pure intellectual property companies such as Rambus, the UK's ARM Holdings and chip startup Transmeta.

"This move to pure IP companies is new," said analyst Mat Hanrahan with Bloor Research. "It's part of the outsourcing movement that has allowed TSMC (Taiwan Semiconductor Manufacturing Company) to become so powerful."

Siemens could not be reached for comment as of press time.

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