Some analysts adjust Rambus forecasts after Intel's SDRAM plans for Pentium 4

MOUNTAIN VIEW, Calif. -- Intel Corp.'s decision to build SDRAM-enabled chip sets into its Pentium 4 microprocessor program deals another blow to the hopes of Rambus Inc. to drive its technology into the PC-market mainstream.

The fact that the company's Direct Rambus DRAM interface may share a berth with a rival memory architecture means OEMs will enjoy a greater range of choices when the Pentium 4 is launched next year. But it is also causing forecasters to recalibrate their market estimates for Direct RDRAM, which after several false starts was expected to make a big showing in 2001.

"We will have to reconsider our Direct Rambus projections," which had shown Direct RDRAM accounting for more than 40% of the DRAM market's unit shipments in 2002, said Jim Handy, an analyst at Dataquest Inc. in San Jose. "Our original forecast was based on the premise that Intel would drive Direct Rambus adoption in the market. Now there is some uncertainty that this will happen," he said, referring to Intel's disclosure that it will provide SDRAM support for Pentium 4 (see July 26 story).

Until Intel's acknowledgement that it was developing a PC133 SDRAM chip set and probing the issue of tying its next-generation processor to double-data-rate (DDR) SDRAM, Rambus proponents had expected the Pentium 4 to propel sales of Direct RDRAM. Now, one analyst said, "It's a whole new ball game."

Shares of Rambus, based in Mountain View, closed down on Thursday at $66.69, following Intel's disclosure, before rebounding to just under $71 on Friday. Only a month ago, the company's stock price hit an all-time high of $124, adjusted for an earlier 4-for-1 stock split.

Despite the fact that it's used in more than 100 products-from PCs to video-game consoles and communications equipment-and the widely held belief that the technology's high-bandwidth packet-data architecture represents the wave of the future, Direct RDRAM has followed a rocky road. A plan for the memory to drive Intel's Pentium III fizzled, and efforts to build a Direct Rambus interface into Intel's Timna also encountered problems.

But Intel has maintained its commitment to Rambus memory, and, according to sources, still plans to use the interface exclusively in the first high-end version of the Pentium 4 to be released in the fourth quarter.

At the mid- to low end of the PC market, however, Intel may be running out of options. The company's decision to support PC133 could hand an advantage to AMD, whose Athlon CPU will support DDR SDRAM early next year.

Intel's language endorsing Direct Rambus for high-performance PCs has been carefully crafted, said Bob Merritt, an analyst at Semico Research Corp., who is based in Redwood City, Calif. "That would appear to leave the door open for the far larger mainstream PC market," he said.

Though Rambus declined to respond to questions related to Intel's decision to design its own PC133 chip set, the company had earlier said the time when Direct RDRAM will become cost-competitive is not far off. Direct RDRAM will carry a 5% price premium relative to SDRAM in 2002 following an upcoming chip redesign, said Rambus vice president of worldwide marketing Avo Kanadjian.

Also, Samsung Electronics Co. Ltd. is developing a four-memory-bank configuration-significantly less than the current 32-bank Direct RDRAM design, said Yong Joo Han, manager of DRAM product planning for the Memory Product and Technology Division at Samsung. Rambus' Kanadjian said this will cut the size of the chip to "only 5% larger than comparably [sized] SDRAM, lowering production costs greatly."

Samsung, the major Direct RDRAM supplier, also is planning to use a low-cost consumer-chip package for PC applications similar to what Toshiba is using in units shipped for the Sony PlayStation II. The current Direct RDRAM microBGA package, which must be licensed from San Jose-based Tessera Inc., is more costly than the new one in development, according to other DRAM makers.