Feeling the pinch from a deteriorating market for DRAM (dynamic random access memory) chips, Rambus Inc.'s financial results for the fourth fiscal quarter are expected to show a drop of 31 percent compared to the same period last year, based on estimates provided by company officials in a conference call Thursday.
Rambus will see a 20 percent decline in revenue for the fourth fiscal quarter compared to the previous quarter, when the company reported revenue of US$23.3 million, said Bob Eulau, senior vice president and CFO at Rambus. Based on that projection, Rambus will see revenue for the fourth fiscal quarter come in around $18.6 million, a decline of 31 percent compared to revenue of $26.9 million reported for the same period last year.
Rambus earns the bulk of its revenue from royalties paid by semiconductor companies that manufacture memory chips based on RDRAM (Rambus DRAM) technology. Until recently, RDRAM was the only memory supported by chip sets for Intel Corp.'s Pentium 4 microprocessor. However, Intel and others, including Taiwan-based Via Technologies Inc., are now shipping Pentium 4 chip sets that use SDRAM (Synchronous DRAM) and DDR SDRAM (Double Data Rate SDRAM), both of which are cheaper than RDRAM.
In addition to a decline in the overall memory-chip market and the prospect of competition for RDRAM from DDR and SDRAM, Rambus continues to bear the legal cost of ongoing patent-related litigation with several memory-chip makers, including Infineon Technologies AG and others. Rambus' legal costs during the fourth fiscal quarter are expected to total around $7 million, down from $8.8 million during the previous quarter, Eulau said.