SANTA CLARA, Calif. With another delay of a key Intel Corp. chip set for enabling Direct Rambus DRAMs in PCs, Rambus systems have missed the window for the Christmas selling season, analysts say, potentially costing PC makers tens of millions, possibly hobbling the upcoming launch of Intel's next version of the Pentium III and causing at least one DRAM maker to halt production of Rambus parts. The delay could also help give double-data-rate SDRAMs a stronger chance at becoming a mainstream alternative for high-end PCs sold next year.
Companies at every level of the supply chain are reeling from the impact of Intel's last-minute delay of the 820 chip set, code-named Camino. Designed to link direct Rambus memory chips with a microprocessor, the product has been seen as the critical last link needed to deploy RDRAM-based PCs.
Intel had planned to officially introduce the Camino this week, and numerous PC OEMs were poised to simultaneously unveil systems using RDRAM technology. Instead, Intel confirmed that the chip set has failed validation tests, postponing the launch indefinitely. Instead of enjoying a long-anticipated ramp for RDRAM technology, the unexpected turn of events means PC makers, memory vendors and other players in the market must re-evaluate their Rambus strategies. Adding insult to injury, nobody knows whether the products that have already been produced can be used, or if they are destined for the scrap heap.
Faced with an uncertain future for RDRAM sales and rising prices for SDRAM products, memory vendors are starting to shift their production mix. "There will be no more wafer starts for RDRAM until we can better understand how long it will take to resolve the Camino situation," said Avo Kanadjian, senior vice president for memory marketing for Samsung Semiconductor Inc. (San Jose, Calif.). "Any capacity that can be freed up will be reassigned to 128-Mbit or 256-Mbit SDRAM products. We will require some convincing before we restart any RDRAM production."
RDRAM and SDRAM technologies use entirely different mask sets, and shifting back and forth is no small task, although Samsung's Fab 9 was designed specifically to manufacture either type of memory. Kanadjian said the company's current RDRAM inventory totals some 100,000 Rambus chips, and the work now in progress totals several million chips. If Intel cannot identify the bugs in its chip set soon, he said, that should be enough to supply PC OEMs through the end of the year. And by shifting to SDRAM, he said the company could pump several million more SDRAM chips into the channel by year's end.
Other memory makers have also altered their approach to Rambus DRAMs. While Toshiba is continuing with its plans to mass produce Direct Rambus chips in the fourth quarter, it will do so only for the video game market, said Jamie Stitt, DRAM business development manager for Toshiba America Electronic Components (Irvine, Calif.). For the PC market, Toshiba is taking a wait-and-see attitude, Stitt said.
"We're certainly more cautious about going ahead than we previously were" as a result of the latest 820 delay, he said. Because of the overall capacity shortage that exists in the DRAM market, and the uncertainty over Intel's Rambus chip set, Toshiba is considering moving more of its capacity to non-Rambus product, Stitt said.
With SDRAM prices on the rise, the glitch could be an opportunity for memory companies to adjust their mix and increase their revenue in the year's final quarter. Other memory vendors are reacting to the same issues, and Hitachi Ltd. said it they will hold off on ramping RDRAM production pending more solid information about Camino's launch.
PC manufacturers could face even bigger problems since they must also delay the introduction of RDRAM-based systems. "The PC companies are about to go into their biggest season without any whizzy systems to put on the shelves," said Sherry Garber, memory analyst for Semico Research Corp. (Phoenix). "Instead, they have nothing."
One analyst estimated that if OEMs have to scrap their existing Rambus motherboards it could cost them $10 million based on an estimated 100,000 boards. But another source said as many as 500,000 Rambus boards may have already been manufactured based on orders of key components.
Ron Bechtold, vice president of sales and marketing for Hitachi Semiconductor (America) Inc. (San Jose, Calif.), agreed that the delays make it likely Rambus will miss the critical holiday window. "You probably won't get a Rambus computer in your stocking this Christmas," he said.
A spokesman for Dell Computer Corp. (Round Rock, Texas) confirmed that the company will not produce or ship any boxes with RDRAM until Intel can correct the Camino bugs.
At this point, Dell and other PC vendors are waiting for Intel to say whether potential workarounds exist. In the meantime, those designs sit unused. "It's always a problem when you plan to be selling something, and it is delayed," the spokesman said. Unlike other vendors, Dell's build-to-order model means they have not yet begun producing the boxes for shipment and will continue to produce SDRAM-based machines only.
If the PC companies have to scrap their RDRAM-motherboards, it will be several months before the technology can debut, said Peter Glaskowsky, senior analyst with MicroDesign Resources (Sunnyvale, Calif.). And all of that is contingent on Intel's finding the cause of the problem.
"We are continuing to work on identifying the cause of the errors, but at present there is no new launch date," said an Intel spokesman. "We will introduce the Camino when it is ready for high-volume production."
The problem seems to lie in the way the Rambus memory slots interface with the rest of the motherboard, Glaskowsky said. The Rambus design allows for three memory slots containing up to 32 chips each. A typical OEM strategy has been to put all three slots on the motherboard but fill only one, leaving space for expansion.
But the third slot in some cases behaves unreliably. "Intel basically had to advise [PC OEMs] they can't use all three slots," he said. "It's my understanding they can't ship motherboards they've already manufactured," said Glaskowsky. The problem occurs even if the third slot is empty, although it is "probably worst in the more heavily loaded configurations," he said.
Indeed, Intel's inability to identify the exact problem is causing stress in the industry. "Intel has told us the delay is indefinite," Kanadjian said. "It is preferable if they could give us some kind of schedule so we can plan our own mix, but I think it's clear that they have already missed two delivery dates and they want to be certain that the next one is 100 percent achievable."
Intel had originally planned to roll out the Camino last spring, but said in February that the schedule would be pushed out for three months. The latest problem scrapped the second planned launch. "This certainly hurts Intel's credibility," said analyst Garber. "Two delays is very serious."
While this delay is embarrassing, said Nathan Brookwood, principal analyst for Insight 64 (Saratoga, Calif.), the real test will come later this month when the company is expected to roll out the 0.18-micron version of its Pentium III, code-named Coppermine. That chip will also integrate the Level 2 cache, which generally brings about a 10 percent performance gain over similar chips running at the same clock speed but with off-chip cache.
Brookwood said Coppermine is the chip most PC vendors expected to really activate the Rambus rush. "If Intel can't correct the Camino situation before the Coppermine debut, that will really throw a wrench into their plans," he said. "[Intel] doesn't even know yet what the problem is. This is an embarrassment to be sure."
The delay could give enough time for some alternative memories to gain a stronger beachhead. Garber suggested that formats such as PC133 chips or double-data-rate SDRAM might be able to capitalize on the Rambus misstep, especially if RDRAM misses the entire fourth-quarter window. "Shifting to 133-MHz SDRAM," she said, "could offer enough of a performance boost to tide the industry over for a while," at which point it's not clear that Rambus will be the only viable contender for next-generation memory dominance.
One company suddenly in the driver' seat is Via Technologies Inc. The Taiwanese chip-set vendor is now the only supplier of a chip set able to support 133-MHz memory chips. In the wake of the Camino debacle, Via may find its product in sudden demand. "This is going to have a strong impact on our sales," said Dean Hays, director of marketing at Via's U.S. subsidiary in Fremont, Calif. "We always say our success is based on our own execution, but the delay of Intel's 820 chip set is all gravy for us."
Another chip-set maker, Reliance Computer Corp., is said to be preparing a chip set that will support the Coppermine CPU and use DDR memories.
Jim Handy, memory analyst for Dataquest Inc. (San Jose), still expects to see Rambus emerge in the long run as the market's dominant DRAM format. "Intel is pushing the market in that direction, and that doesn't leave a lot of choices for the rest of the industry," he said. "Alternative memory, such as DDR, would need a lot more time than they will get from this delay to really become established. Rambus has soundly missed the Christmas market, but they will probably ramp next year."
Bechtold of Hitachi, which is not a strong proponent of Rambus, said the latest delay may make Intel relax its corporate push for RDRAM memories. "I think they will begin to let individual product groups have more sway about choosing which memory type makes sense for their designs," he said.
Though Rambus' stock value plunged some 30 percent on news of the Camino bugs, executives at Rambus remain optimistic about the long-term picture. "We still see it as inevitable that RDRAM will become the dominant memory technology," said Dave Mooring, senior vice president for the Mountain View, Calif.-based company.
Separately, Fujitsu Ltd. had decided even before the most recent Camino delay not to enter the Rambus market, according to Keith Horn, director of memory marketing for Fujitsu Microelectronics Inc. (San Jose). The company had been sitting on the fence for some time, going so far as to produce a prototype of a 72-Mbit RDRAM, while holding off on making an investment in test and packaging infrastructure until the market situation became clearer.
The internal debate ended recently as Fujitsu decided to put its efforts behind its double-data-rate (DDR) and fast cycle DRAMs instead of Rambus. "We're seeing a lot of interest in those products, and decided to focus on those efforts," Horn said.
As to whether the company may revisit that question, Horn responded, "I'd never say never, but certainly we have no plans to address that market." A Fujitsu spokesman later added that Fujitsu's engineering efforts on Rambus are still ongoing in Japan. Observers believe those efforts may simply be intended to fulfill contractual obligations to Rambus.