Next-generation memory supplier Rambus Inc is now inside the tornado according to president and CEO Geoff Tate, borrowing a phrase coined by Geoffrey A Moore, and on the verge of the hypergrowth market phase of high-volume production. But nobody is quite certain when that hypergrowth will begin, and until it does Rambus must be content with more modest financial achievements. Yesterday, the company announced first quarter profits of $2.4m for the quarter, up from $2.1m in the same period last year, with diluted earnings at $0.08, compared with last quarter’s $0.07 and last year’s $0.06. Revenues for the quarter were $10.6m, up 13% over the same period last year and up 9% from the previous quarter. The results generally met our expectations said Gary Harmon, VP of Finance at Rambus, who said contract revenues were up 8% and royalty revenues up 16%, largely on the back of strong sales of Nintendo-64 games machines (which use 18-Mbit Rambus Direct RDRAMs) leading up to the Christmas period. But Harmon warned investors that the next two or three quarters are likely to see earnings no better than flat compared to the first quarter. That’s because the seasonal Nintendo sales are likely to decline, and also because sales in the PC graphics and multimedia business have not met expectations. Two Rambus customers, Cirrus Logic (which sold off its PC graphics division) and Chromatic Research Inc (which was acquired by ATI) have withdrawn from the market with a faster shipment ramp-down than was expected.

PC main memory

All eyes however, are on the moment when the 800MHz Direct Rambus memory interface technology finally starts being used in PC main memory – and that depends on Intel Corp. Rambus says that, as far as it’s aware, Intel continues to be on track for introducing the technology some time in 1999. Analysts are setting this date as sometime during the July to September third quarter, when Intel is expected to release its Camino (820) chipset, supporting Direct RDRAM. Royalties for this introduction, if it happens on schedule, won’t impact earnings at Rambus until the following quarter. The next update from Intel is expected at the Developers Forum in Palm Springs next month. Meanwhile, Rambus is likely to incur additional expenses to prepare for the expected ramp-up. Better news during the quarter included the licensing of the Direct Rambus interface by Advanced Micro Devices Inc, which plans to introduce its own Rambus-enabled chipset, and Compaq Computer Corp’s decision to use Direct Rambus DRAMs in conjunction with its Alpha EV7 RISC chip. Rambus also won numerous endorsements at Comdex in Las Vegas, including its first use in a digital television decoder from Panasonic. CEO Geoff Tate says that synchronous link dynamic SLDRAM has now lost support as credible competition for Direct Rambus, while double data-rate SDRAM, a faster version of SDRAM which would represent a more evolutionary approach to faster memory architectures, has seen design wins only at the high-end of the market, not the volume market. One of the biggest worries for Rambus is that the rest of the struggling memory industry can scale up its testing and manufacturing operations in time for the anticipated volumes, which some estimate could amount to over 50 million units by the end of the year. Tate estimated the required investment to support these volumes would be in the region of $500m, a figure he claimed was a realistic and achievable one. If he’s right, and volumes rise quickly in the second half of the year, Rambus might see fiscal 2000 growth at rate of over 150% compared to this year.