Rambus Soars on Toshiba Licensing Deal
By Matt Paolucci

Toshiba Corp. said it has extended its licensing of Rambus Inc.'s Technology, covering several types of high-speed memory and controllers that interface with memory. It covers synchronous DRAMs, Double Data Rate (DDR) memories, and Fast Cycle RAMs (FCRAMs).

The new agreement requires Toshiba to pay higher royalties for those chips than the normal rates on Rambus DRAMs. Mountainview, the California-based Rambus, did not release details about the higher payments.

Under these terms, Rambus will receive both royalty payments and a licensing fee from Toshiba. The Japanese electronics giant has been developing, manufacturing and selling Rambus compatible IC's for the past ten years.

"This agreement ensures that Toshiba has rights to these important Rambus patents which are necessary to continue providing our customers with their choice of memory and logic products," said Yasuo Morimoto, president and CEO, of Toshiba Corp.'s Semiconductor Company.

Put simply, Rambus' technology supercharges the speed of computer chips. The Company's Rambus Dynamic Random-Access Memory (RDRAM) chips accelerate the exchange of signals between a computer's memory and logic chips, alleviating the bottleneck that has previously prevented the development of faster PCs. RDRAM chips are used in PCs, workstations, video game consoles, and other electronic systems.

Toshiba is not the only company licensing Rambus' chip technology. Rambus has more than 30 licensees, including Hitachi, NEC, and Samsung, along with microprocessor companies AMD and Intel. Royalties and licensing fees currently account for roughly 20 percent of sales. Rambus is actually fighting Hitachi Ltd. over patent rights to interface technologies in a range of microprocessors and memory chips, including SDRAMs and DDR devices.

Regarding the suit with Hitachi, Rambus claims its patent portfolio covers fundamental aspects of high-speed memory interfaces, including techniques used in SDRAMs, DDR SDRAMs, FCRAMs, and the controllers connecting that them.

"We have had a long and mutually beneficial relationship with Toshiba. Rambus develops and licenses IP - our objective is to produce innovations that will benefit the semiconductor and systems industries, and by licensing these innovations to generate a return on investment to our shareholders," said Geoff Tate, Rambus' chief executive officer.

Some industry observers suggest that Rambus is attempting to make sure it collects on royalties while it waits for RDRAM volumes to increase. The move to collect royalties on non-Rambus DRAMs also could increase the cost of competing memory formats.

Tate added, "We believe our Rambus memory interface is the best solution for the majority of the market. Developing and marketing the Rambus memory interface has been and remains our top priority. But we are willing to license our IP for other memory interface solutions as well."

UBS Warburg analyst Greg Mischou said the fact that Toshiba is willing to license the technology strengthens the case against Hitachi, and could increase the odds that other memory makers will license Rambus' patents.

As a result of the news, Rambus shares were up more than 45 percent at $82.31. Yesterday, shares of the Company split 4-for-1.