Intel-ligent Strategy?

Electronic News, Oct 23, 2000

Is INTEL CORP. ACCUSING Rambus Inc. of using toll-collecting tactics a case of the pot calling the kettle black? (See story on Page 1 for details.) Some analysts and insiders think so. According to the public portion of the contract between the two companies, any royalties over 2 percent that Rambus collects on RDRAM automatically flow back to Intel, according to Bert McComas, founder and analyst of InQuest Market Research, who has done an exhaustive analysis of the contract.

Intel explained the clause as a way to put a cap on RDRAM royalties and mitigate any motivation Rambus might have to gouge the market, McComas said. Still, the contract does not stipulate what Intel should do with the money if it receives any flow-on royalties. "Was Intel going to give them back, or give them to charity?" asked Bill McLean, president of IC Insights. One industry insider wondered what Rambus planned to do with excess royalties on double data rate (DDR). "(Rambus is) asking for more than 2 percent on DDR. Is Intel going to get this money?"