Well, sort of. Like Qualcomm, and almost all chip companies in business today, Rambus won’t actually make the semiconductors itself; it will hire outside manufacturing companies to fabricate them. Still, it’s decision to become a fabless chip company is a significant shift in its business model, and shows that the 25-year-old company is trying to escape its pugalistic reputation after decades of lawsuits. In an industry where consolidation is leading to higher and higher stakes, Rambus is ready to control its own destiny.
Rambus develops DRAM memory technologies that other companies license and put into computers, laptops, and handheld devices. Now its new foray into chip building has Rambus building add-on memory buffer chips that help reduce bottlenecks between a computation chip and its memory. It plans to sell the chips it manufacturers to existing memory companies like Hynix, Micron, and Samsung. The market for the Rambus chips would be in big web-scale customers, as well as companies that have applications with a lot of memory demands. For example, databases that purport to offer real-time analytics would be an ideal application for the new Rambus product.
The demand for such memory buffering chips isn’t huge yet, but it is growing. Making such chips is also a small step for Rambus as it seeks to test the waters in a different type of business model than its previously pursued. It’s one thing to license IP and another to take that IP all the way to a physical product.
There are definitely certain advantages, such as controlling design implementation and marketing the technology to customers in a more turn-key format, without having to design it into their existing hardware. The new chip also provides Rambus a way to escape issues associated with its proprietary format. There are also risks, however. In a smaller manufacturing run, there’s always the chance a company might get bumped from its slot in the fabrication plant if a larger customer needs supply during a busy period. If the part being manufactured is especially complicated, there are also concerns about manufacturing quality to contend with.
Rambus isn’t giving up its licensing model, which provides it some security in case the new chip hits a speed bump or stalls out. Meanwhile, the industry will be watching to see how the company fares with this experiment.
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