The president of Elpida Memory Inc., the NEC-Hitachi joint DRAM venture, said the firm may be forced to renegotiate its synchronous DRAM licensing agreement with Rambus Inc. if three rival memory makers escape paying royalties while current litigation drags on indefinitely.
Kenji Tokuyama, Elpida president, interviewed at the Intel Developers Forum Wednesday in San Jose, said Hyundai Electronics, Infineon and Micron Technology, could have a SDRAM and DDR price advantage by not having to pay royalties and licensing fees to Rambus.
The three competitors are currently locked in protracted litigation contesting Rambus synchronous DRAM patents as invalid and unenforceable due to antitrust actions. "Rambus said the [SDRAM patent] lawsuits would be settled quickly. But the litigation now appears that it could drag on for some time. Meanwhile, Hyundai, Infineon and Micron are not paying royalties to Rambus that we are having to pay. If this continues, we are disadvantaged," the Elpida president told EBN.
Tokuyama said Elpida would raise the renegotiation question with Rambus when its current agreement expires. He said under terms of the pact he can't disclose when it expires, "but every contract has an expiration date. At that time we will see what has developed in the [synchronous patent] law suits, and decide whether we need to renegotiate terms."
He also said he couldn't disclose the amount of royalties Elpida is paying. Rambus has previously said it was broadly seeking 2 percent royalties on all SDRAM sales and 3 percent on all DDR sales in its licensing agreements.
In any event, Elpida was concerned that the extra fees were large enough to put it at a cost disadvantage against the three litigants that aren't paying the royalties. The Elpida chief executive said by the end of the year SDRAMs will account for half of its chip revenue, with DDR nearing 20 percent and Direct Rambus DRAMs ramping up to 30 percent.
"The first half of next year, however, is difficult to forecast the mix between DDR and RDRAMs. It all depends on whether DDR continues a gradual rampup or makes a big jump in the market. Our customers will determine that," he said.
Elpida last week broke ground for its previously-announced 300-mm wafer fab in Hiroshima, Japan. Tokuyama said Elpida has no intention of slowing down construction due to the present collapsed DRAM market. "We expect the market to return to normal by the end of the year. When the 300-mm fab starts production in mid-2002, we will need the extra capacity," he said.
Initial production rates at the Hiroshima fab will be 10,000 300-mm wafers a month, eventually ramping up to 20,000 wafers a month. There is room at the site to build a second stage to double production. Even so, Elpida will continue to need to use fabs from its parent NEC Corp. and Hitachi Ltd. to supply its 100K a month wafer needs, the official added.