[mike2h]

posted by jcradd at rambus forum at tmf.

A lot has been said lately about the price-fixing of DDR in an attempt to drive RDRAM out of the market. There were 2 sides to that effort - cheap DDR and expensive RDRAM. Why was RDRAM expensive?

Here's what Bert McComas and Desi Rhoden told the media about the undersupply/overprice of RDRAM in 2000:
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"Due to very low yields, a larger die size and expensive packaging, the price delta for RDRAM stands at least two to three times that of SDRAM, McComas said.
"You just can't get there overnight," he added. "Intel signed up to an impossible goal and it realized it couldn't make it.""
"If Intel gained control of the memory technology through Rambus, McComas said, they could slow the migration to higher density chips and force memory manufacturers to battle each other in price. Theoretically, that could have caused DRAM prices to drop and then Intel could force its CPU migration path on consumers.
Through its heavy handedness, Intel lost credibility with DRAM manufacturers. Most of them took seed money for RDRAM production lines, but by then, most of them had already evaluated the technology and determined that the SDRAM roadmap was the most logical way to go.
Ultimately, both DRAM and Intel are driven by customers, according Desi Rhoden, president and chief executive officer of Advanced Memory International Inc., a DRAM industry consortium in San Jose. Intel can try and drive the market and take control, he said. Or memory companies can try and dictate the technology. But in the end, Rhoden said, PC OEMs and consumers actually make the decisions based on what they are willing to pay for a certain product."

http://www.findarticles.com/cf_dls/m...le.jhtml?term=
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What was really going on?
From the FTC ID: http://www.ftc.gov/os/adjpro/d9302/0...aldecision.pdf

528. In December 1996, at a SyncLink Consortium meeting attended by various manufacturers, Tabrizi stated that " (m)any suppliers are paranoid over the prospect of a single customer, i.e. , Intel, having control of market. We can't resist such a possibility individually. We need some united strategy. " (RX 808 at 2).

529. At that same meeting, the assembled manufacturers agreed to hold a meeting of DRAM manufacturer executives in Japan in January 1997. (Tabrizi, Tr. 9041). Prior to the meeting, Tabrizi sent an email to other DRAM manufacturers that stated that the "Intel decision to go on a Rambus route was pure political and domination and control over the DRAM suppliers and not technical." (R 802 at 3; Tabrizi, Tr. 9041-42). He then stated: "As I have mentioned many times before, Intel does not make DRAMs, we do. And if all of us put our resources together, we do not have to go on this undesirable path. The path of control and domination by Intel." (R 802 at 3). He urged the DRAM manufacturers to "stick together on this matter. (R 802 at 3; Tabrizi, Tr. 9042-43).

535. In April 1998, Bert McComas, an industry consultant, gave an exclusive seminar for DRAM manufacturers about Intel's selection of RDRAM. (R 1138 at 1; Tabrizi, Tr. 9061-62). McComas pre-cleared his seminar invitation and list of topics with Tabrizi. (Tabrizi, Tr. 9064).

536. McComas's invitation asked its recipients not to forward the invitation to Rambus or Intel. (R 1138 at 1).

537. During his April 1998 seminar presentation to the DRAM manufacturers, McComas stated that a manufacturer that chose to build RDRAMs was making a "guaranteed bad bet for margin enhancement " and he stated that RDRAM deepens the manufacturer's financial dilemma. (RX 1482 at 12 26). As a "possible strateg(y)," McComas suggested that DRAM manufacturers (t)ape out but do not fully productize or cost reduce" the RDRAM device, in an effort to "resist popular deployment" of RDRAM. (R 1482 at 34-35).

539. McComas spoke at the June 25 , 1998 SLDRAM Executive Summit about the problems faced by DRAM manufacturers. One of the tactical issues he identified was how to Manage Price Competition, Profitability." (RX 1188 at 1). He also talked about how manufacturers could "Respond to the Strategic Threat of Intel/Rambus " and he asked the question Who will control the DRAM industry?" (RX 1188 at 1). McComas stated that Intel/Rambus are using your money to take control of the DRAM industry" and that Intel would [o]rchestrate early oversupply situation " and he emphasized that "[f]ragmented competition undermines all DRAM manufacturers." (R 1188 at 2 6; Tabrizi, Tr. 9073).

540. Another industry consultant, Victor de Dios, also gave a presentation at the June 25 1998 SLDRAM Executive Summit. (Tabrizi, Tr. 9071-72). De Dios told the assembled executives that "many of the problems are industry problems, not company problems. Competition will not resolve them." (RX 1204 at 4 (capitalization omitted)).
541. During his presentation at the June 1998 "Executive Summit " McComas suggested that the DRAM manufacturers share their RDRAM production plans to determine whether there would be a demand-supply imbalance. (Tabrizi, Tr. 9073-74).

542. In an August 1998 email to Tabrizi, McComas sent a draft message to DRAM manufacturers which stated that " (d)uring the critical production ramp-up phase of Direct Rambus, DRAM vendors will need a constant flow of information to help make wise decisions and to walk the fine line between a pleasant shortage and a disastrous over-supply." (R 1232 at 1).

543. Tabrizi agreed that a shortage of RDRAM would please DRAM manufacturers because "(p)rices go up. " (Tabrizi, Tr. 9077).

544. The PC OEMs recognized that for RDRAM to succeed, output of RDRAM had to increase. They tried to influence the DRAM manufacturers to increase RDRAM output. (R 1287 at 4 ("Intel and major users have been trying to influence improve (sic) RDRAM output")). As Gross of Compaq testified, Intel, Compaq, and other PC OEMs were trying to infuence DRAM manufacturers to increase output of RDRAM and to align roadmaps with Intel' roadmap. These OEMs wanted an RDRAM production ramp-up so that they would have suffcient availability and lower RDRAM prices. (Gross, Tr. 2318-20).

545. It was important to Intel and to the PC OEMs that the DRAM vendors increase the volume of RDRAM because the highest volume parts have a cost advantage. (RX 1532 at 1).

546. In response, DRAM manufacturers agreed to manufacture RDRAM in larger volume. For example, in 1998, Hyundai committed to produce 30,000 RDRAM units for Compaq. (R 1302 at 6). Similarly, Micron committed to produce 15,000 RDRAM units for Compaq. (RX 1302 at 6). Neither company, however, met these commitments. (Gross Tr. 2327-29). According to Compaq, the DRAM manufacturers would not "increase their output at the rate at which we needed to support our systems. " (Gross, Tr. 2345-46).

547. Tabrizi, in 1998, believed that Intel would not change course unless RDRAM failed to obtain market penetration. (Tabrizi, Tr. 9082-83). He admitted that one way to cause RDRAM to fail to obtain market acceptance was if the OEMs were convinced that even if volumes went up, prices would not fall. (Tabrizi, Tr. 9083). If the OEMs were convinced of this they would not adopt RDRAM. (Tabrizi, Tr. 9083).

548. In the fall of 1998, Hyundai gave RDRAM price projections to its customers that were significantly higher than those reflected in its internal pricing documents. (Tabrizi, Tr. 9085- 90; RX 1280; RX 1293A). "Intel was tellng everybody (that RDRAM is) only going to be a 5 percent premium. . . . I wanted to make sure my OEM knows it's going to cost them more than 5 percent. . . " (Tabrizi, Tr. 9091-92).

549. A report prepared by an Infineon engineer about an October 1998 meeting reportedly attended by Tabrizi, along with engineers from Micron and Infineon, states that (a)ccording to Farhad Tabrizi, Hyundai has given Rambus ASP projections for end of next year of 2 to 3 times of todays SDRAM prices; they also gave to Intel a production projection of three times their actual plans => They encourage every DRAM manufacturer to do the same in order to let Intel not generate a Rambus oversupply." (R 2192 at 2). Tabrizi denied at trial that he had made the statements attributed to him in the Infineon trip report. (Tabrizi, Tr. 9097).

513. In an April 1999 email exchange among Micron Vice President Bob Donnelly, Micron DRAM Marketing Manager Jeff Mailoux, and Micron JEDEC representatives Kevin Ryan and Terry Lee, an article was attached describing Samsung's plans to produce as much as forty millon Rambus devices in 1999. (R 1444 at 3). In response, Ryan complained that Samsung had "broken ranks with the other suppliers and sold their soul to the devil." (R 1444 at 1). One of the recipients of the email, Mike Seibert, responded that "(these guys (Rambus) are big trouble for us all. If this thing gets into an oversupply mode with RDRAM things could get really ugly. " (RX 1444 at 1). Seibert then asked Micron Vice-President Bob Donnelly if Samsung understood "what the Rambus/Intel biz model will do to our autonomy?" (RX 1444 at 1). Vice-President Donnelly responded that he had "certainly made the point with the offcers that Intel. . . ultimately could control the DRAM industry." (R 1444 at 1).
514. In April 1999, Micron completed its higher 144Mb Rambus design and taped out the part, meaning Micron sent it off for fabrication. (CX 2735 at 24 29; Lee, Tr. 6744-45). Micron indicated that it expected to release its 144Mb samples in June 1999. (CX 2735 at 31). However, according to an Intel analysis of Micron RDRAM performance as of May 1999 (t)echnically, they are well behind. " (RX 1453 at 1). As a result, Intel felt, Micron was only marginally able to ship anything at all in ' 99." (R 1453 at 1).

515. Intel concluded in May of 1999 that Micron's plan was intended to "create as much turmoil to prevent rdram as possible." (RX 1453 at 1). The Intel analysis stated:
Marketing - they (Micron) are aggressively rallying the industry on alternate technologies. They are clearly driving the Sdram- 133 alternatives, they are strongly driving ddr and the only player left driving sync-link. Their advertising implies that the rest of the industry is blindly following the Intel roadmap (sheep, communism etc). Should make you mad.. .
Relationship - we ve tried to broker a deal with rambus (fixing contract in area of ip pooling, royalties and marketing) and per earlier mails, with their - advertising and aggressive drive to alternatives, they pissed rambus off enough that any hope of an agreement is pretty dead. They have also ignored our attempts to work with them on enabling, design reviews roadmap alignment etc. (RX 1453 at 1).

551. In a July 1999 email, Mario Martinez of Hyundai recommended to Tabrizi and others at Hyundai that "( w )ith Samsung building significant amounts of product, we need to work with them to limit the supply in the market, otherwise we both will be competing for market share which will result in an oversupply. We have to meet with Samsung and discuss our and their production plan, TAM analysis and targeted market share." (R 1487 at 4; Tabrizi, Tr. 9103).

552. Another Hyundai employee responded in the same email: "(I) have connection in samsung, if i know, what time you are available, i wil try setup meeting with key persion (sic) in samsung in seoul korea. (A)nd i will try persuade them. (A)ctually they also have same idea for rambus business compare with you." (R 1487 at 4; Tabrizi, Tr. 9104).

553. Tabrizi admitted at trial that he had told Sang Park, then the President and Chief Operating Offcer ofHyundai, that he wanted to "kill" Rambus and force RDRAM from the market. (Tabrizi, Tr. 9105-07). Tabrizi subsequently testified that what he meant by "killing Rambus was really just "Rambus suicide, (with) me watching on the sideline. " (Tabrizi Tr. 9109). In his June 2000 email to Park, Tabrizi stated: " (i)f Intel does not invest in us, I really want to ask you to let me go back to my old mode of RDRAM killng. I think we were very close to achieving our goal until you said we are absolutely committed to this baby." (R 1661 at 2).

554. Gross of Compaq subsequently testified that because the price of RDRAM did not decrease and because Compaq did not believe that it would decrease in the future, Compaq decided to abandon its plans and to shift to DDR. (Gross, Tr. 2339).

555. Similarly, Advanced Micro Devices ("AMD") shelved plans to adopt RDRAM because, based on what they were told by DRAM manufacturers, it was clear that DDR, not RDRAM would become a commodity product. (polzin, Tr. 4013).

516. By October 1999, an Intel manager explained to Intel's Peter MacWiliams (s)o far all our discussions with Appleton have had zero benefit for us. . .. (w)e have gone out of our way to help them resolve Rambus contract issues and in return we have gotten nothing but deception. Micron is working very hard to do everyhing against RDRAM." (RX 1515 at 2).

556. By May 2000, the situation had not improved, and Dell was considering moving into a low key Rambus mode." (R 1636 at 1). The Dell "message" was "pretty straightforward" "Dell has booked our products over the last year around the assumption that RDRAM prices would decline and close on SDRAM. This would help us create demand. ..... The memory vendors have shown no desire to drop prices, therefore we are reevaluating our strategies...... so the message to them is drop prices or we will continue to decrease our RDRAM forecasts and we will architect next generation systems around DDR ..... we wil give the memory vendors til the end of May to reply to our request ..... if they still have no desire to drop prices, we should push ahead rearchitecting chipsets around DDR. " (RX 1636 at 1).

557. RDRAM failed to command significant market share despite the fact that it was considered by some to be the "best solution." (R 1762 at 5). As Peter MacWiliams of Intel put it: (MacWillams, Tr. 5075 (in camera)).

[The_Neon_Cowboy]

ddr blows... and it almost took intel down with it.....

intel and rambus are married companies,

rumbus offers a little gain with a much larger price tag, even intel bought the bullet and swithed to ddr

[mike2h]

the point of the post is that the high price of rambus was artificial.