INTEL VEERS FROM RAMBUS-ONLY PLANS FOR PENTIUM 4

July 28, 2000

COMMERCIAL NEWS

San Diego, CA — Michael Kanellos reports that Intel has confirmed that the company will come out with a chipset next year for the Pentium 4 geared to work with standard memory, a move that raises questions about the future of Rambus-based memory.

Intel spokesman George Alfs said today that the company will come out with a chipset, a crucial set of chips that connect the processor with the rest of the computer, that will allow computer makers to build Pentium 4 computers with ordinary SDRAM memory running at 133 MHz.

Intel is also investigating ways in which the upcoming chipset can be tailored to let PC makers adopt DDR DRAM, a version of SDRAM that runs at twice the speed.

The announcement, arcane as it might sound, will no doubt be seen as a watershed event in the memory market. Until now, Intel has said that it will only make chipsets for the Pentium 4 that work with memory based on designs from Rambus, although Intel executives broadly hinted in a financial conference call last week that that could change.

Rambus memory is expensive, costing at least three times as much as standard memory. Memory makers have cut production of Rambus memory because of the expense.

PC makers, meanwhile, have adopted chipsets from Intel rivals such as Via Technologies to avoid incorporating expensive Rambus memory with the Pentium III. Analysts have questioned whether enough Rambus memory exists to allow Intel to even launch the Pentium 4, due later this year, in substantial volumes.

“It’s a real admission of how big the problems are with Rambus in the marketplace,” said Linley Gwennap, an analyst with The Linely Group. “Not necessarily with the technology, but with the shortage of supply and the resistance of major manufacturersÖIt forced Intel to rethink a major part of their P4 roadmap.”

The upcoming chipset does not have an official name yet, said Alfs. However, he said it will have a 400-MHz front side bus, the data channel that connects the processor to memory.

Even inside Intel, factions supporting the different memory technologies have sprung up, according to sources.

By coming out with a Pentium 4 chipset that works with standard memory, Intel effectively is giving PC makers an opportunity to adopt its upcoming chip and ordinary, less expensive, memory.

The chipset most likely will be featured in mainstream and budget PCs. Via Technologies has said it will come out with a Pentium 4 chipset matched with DDR DRAM.

“You’ll see a continued assertion of Rambus at the high end, but is someone going to pack their lowest-cost box with Rambus? Not likely,” said Dean McCarron, principal analyst at Mercury Research. McCarron added that the chipset would likely come out in the second half of 2001.

A shift toward the new chipset has likely been brewing internally for some time. Paul Otellini, the general manager of the Intel Architecture Group, strongly indicated last week that the company was looking at alternatives.

“We still view this memory technology (Rambus) as delivering the best overall performance…but this is not to say that we won’t have other memory configurations to take advantage of other price points,” he told investors.

Today’s move, however, won’t be the last word in the Rambus debate. Pentium 4, of course, will debut in computers with Rambus memory when the chip comes out late this fall. If Intel can make a case for increased performance through the matching of the Pentium 4 and Rambus, Rambus memory can gain traction in the upper end of the PC market, Gwennap said.

Rambus has also claimed that standard memory and DDR DRAM infringe on its patents. So far, Toshiba and Hitachi have agreed to pay royalties to Rambus on their standard memory. Thus, even if the industry shifts away from Rambus memory, the company will see some sort of income stream.

On the other hand, benchmarks recently posted by Intel show that Rambus does not provide any performance gains in Pentium III systems, noted Bert McComas, an analyst with InQuest Market Research. History could repeat itself with the Pentium 4.

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