Rambus Inc., known for patent battles against chip makers, is
becoming one itself.
The Sunnyvale, Calif., company on Monday is announcing plans to
sell chips under its own brand for the first time in its 25-year
history. Rambus said the products, designed to boost the
performance of server systems, are the latest step in a multiyear
strategy to leave behind a business model linked to litigation.
"We have to be flexible," said Ronald Black, who has been
pushing for changes since he was named Rambus's chief executive in
2012.
Rambus reported less than $300 million in revenue in 2014. But
its legal tactics, and business model, have received outsize
attention.
Rambus, founded in 1990, developed technologies to make memory
chips work faster. Instead of selling chips itself, the company
adopted the then-novel idea of building a business around licensing
technology for chips sold by others.
When chip makers declined, Rambus sued them for patent
infringement. The Federal Trade Commission entered the fray with
antitrust charges in 2002, alleging that Rambus deceived an
industry standard-setting group about its plans to enforce patents
on technologies the group adopted. Rambus insisted it never
violated the group's rules.
The FTC dropped its case in 2009 after adverse court rulings.
Meanwhile, Rambus began making peace with most memory-chip makers.
SK Hynix Inc., for example, in 2013 agreed to pay Rambus $240
million in patent royalties over five years, a deal extended in
June by six years and $432 million.
Rambus also sought new sources of revenue, gradually reducing
its near-total reliance on licensing patents and technology. In
June 2011 it agreed to pay $342.5 million to buy Cryptography
Research Inc., a San Francisco company specializing in security
technology. It also started a lighting-related business based on
LED technology.
Mr. Black said the latest move builds on Rambus's expertise in
communications technology associated with memory. It developed a
set of components that include data buffers, chips that are
sometimes incorporated with memory chips on modules plugged into
servers. Buffers hold data temporarily while it moves between other
components, helping to minimize communication delays.
Rambus won't actually manufacture its new chips. Like most
semiconductor companies founded since the 1980s, it will hire
manufacturing specialists to make them.
It won't lack for competition. Companies such as Integrated
Device Technology Inc. and Inphi Corp. already sell data buffers.
Indeed, Mr. Black stressed that Rambus is abiding by standards set
by the group associated with its original patent disputes to ensure
its new chips are compatible with others' components.
Mario Morales, an analyst at research firm IDC, estimated that
$250 million to $300 million worth of such chips are sold each
year—a fraction of the nearly $50 billion market for the memory
chips that data buffers complement.
But Patrick Moorhead, an analyst at Moor Insights &
Strategy, said he expects the business to grow. He said new, faster
memory chips exploit data buffers well and appeal to big Web
services and other companies sifting through huge volumes of
business data.
Mr. Black said computer makers and other customers wanted
another credible supplier of the components. Though Rambus isn't
likely to become a broad semiconductor supplier, he said, the new
chip probably won't be the last.
"We will do this again," Mr. Black said.
The Rambus chips are now shipping to customers in sample
volumes, with commercial production starting in late 2015, the
company said.
Write to Don Clark at don.clark@wsj.com
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