Rambus' agreement to settle legal claims with Samsung Electronics could accelerate deals that could help new memory technology being developed by Rambus get to market faster, analysts said.
Samsung and Rambus announced a deal Tuesday that ended years of litigation between the companies. As part of the agreement, Samsung will pay Rambus around $700 million over five years and make an equity investment of $200 million in the company.
Rambus develops technologies that enable high-speed memory architectures that it licenses to memory makers. The technologies are mainly used in high-performance devices. Rambus' XDR memory architecture, for example, is used in Sony's PlayStation game console. The license agreement gives Samsung access to Rambus' intellectual property for five years.
Samsung and Rambus also signed a memorandum of understanding to jointly develop memory technologies, which will initially focus on graphics and mobile memory. The companies will also revive "a potential collaboration" on server and high-speed NAND Flash memories, the companies said.
The Samsung deal sets the stage for Rambus to settle with other memory makers in other legal disputes, analysts said. Such settlements could help Rambus gain customers for its mobile and server technologies.
Rambus has had a checkered past with litigation and it needs to settle cases to line up more manufacturers to push its memory technology to market, said Nathan Brookwood, principal analyst at Insight 64. Chip manufacturers push Rambus' memory-related interface technology to devices.
"The important thing if you're an innovator is for someone to use [your technology]. Samsung will have a more formal and productive relationship with Rambus as opposed to just being litigants, which bodes well for both," Brookwood said. Ending legal disputes could help Rambus and memory companies get back to innovating technologies and bringing them to market.
Rambus in the past filed many suits alleging memory makers infringed on its patents. Some companies in turn alleged that Rambus monopolized markets and failed to disclose its patents with the standards-setting organization, the Joint Electron Device Engineering Council (JEDEC). Rambus was invited to JEDEC as an observer, but memory makers alleged the company used information from the meetings to monopolize markets.
Rambus in 2004 also filed a price-fixing case against Samsung Electronics, Hynix Semiconductor, Infineon and Micron Technology, accusing the companies of violating antitrust laws by fixing memory prices to keep Rambus technology away from the market. Rambus settled with Infineon in 2005 and is asking for Samsung's name to be removed from the case as part of Tuesday's settlement agreement.
Samsung is one of the world's largest memory makers, and the huge settlement could pressure Hynix and Micron to settle quickly with Rambus, said Avi Cohen, a financial analyst with Avian Securities.
"Both Micron and Hynix now share increased liability with regard to the price-fixing, antitrust allegations, and stand on less defensible ground," Cohen said.
But the lawsuit against Micron and Hynix could encourage other companies to go through the judicial process if either of them won at trial, Cohen said. That should give Rambus plenty of impetus to settle quickly and cheaply.
Micron and Hynix have delayed court proceedings in the price-fixing case, in each case saying lawyers were sick. That could be a sign that settlement talks are going on behind the scenes, said Gregory Wong, an analyst with Forward Insights. The jury trial was due to begin in the Superior Court in San Francisco on Jan. 11, but a meeting will be held on Thursday to decide when the case will start.
Hynix and Micron are smaller companies and can't easily afford to keep pursuing the case, which points to quick settlement agreements, Wong said. The companies could likely reach agreements with Rambus before the case goes to trial, Wong said.
A Hynix spokesman declined comment, but Micron said it would pursue ongoing litigation against Rambus.
"We do not anticipate this [Samsung] settlement will have any impact on our ongoing litigation with Rambus," said Dan Francisco, a Micron spokesman. Rambus' allegations in the price-fixing case against Micron are baseless, he said.
"We look forward to the evidence being presented at trial that Intel and PC OEM customers ultimately chose DDR memory products, an open standard memory solution, based on the technology and its cost advantages over Rambus' RDRAM product," Francisco said.
Though settlements could be close at hand, Rambus' long history of litigation has attracted suspicion from memory makers, Insight 64's Brookwood said. However, the settlement agreement with Samsung validates Rambus' technologies that have otherwise been challenged by memory makers. As a leading memory maker, Samsung could help accelerate the adoption of Rambus technology in devices, Brookwood said.
Rambus recently has focused on low-power, high-speed memory interfaces for handheld devices that could run faster and cooler. As part of the settlement agreement, Samsung and Rambus will jointly focus on developing mobile memory technology. Having Samsung as a partner could ensure Rambus' innovations reach the mobile market, Brookwood said.
However, it's not a sure thing that settling legal matters with Hynix and Micron would have a big impact on Rambus. It takes years to get new technologies to market and the cases have left a bad taste in memory chip makers' mouths. The memory market for mobile devices is also very price sensitive, which could keep vendors from offering the memory types based on Rambus' technology, which tends to be higher priced.
But Rambus has clever technology that could give Samsung a competitive advantage over its rivals, Brookwood said. Samsung could use Rambus technology to get an early jump in new markets of niche mobile products that need faster performance.