Rambus and Samsung bury the hatchet with $900M settlement

Rambus has closed on the chapter on one piece of a colossal litigation nightmare. Today, the technology-licensing firm is announcing today it has settled litigation with Samsung Electronics in a deal that is valued at about $900 million.

In exchange, Samsung is buying $200 million in Rambus stock (9.75 million shares), will pay another $200 million in cash to Rambus, and then make quarterly payments of $25 million for the next five years. The companies have also reached an agreement relating to a new generation of memory chip technology. That technology will focus on graphics and mobile memory-related applications for a new generation of consumer electronics. Among the technologies they will collaborate on is NAND flash memory, which goes beyond Rambus’ typical memory technology.

“This is by far the largest agreement we have ever created,” said Harold Hughes, chief executive at Rambus in Mountain View, Calif.

The deal could break a huge legal logjam that has prevented Rambus’ technology from being widely adopted over the past 15 years. Samsung has shipped millions of chips based on Rambus’ technology, but the litigation between almost all of the major memory chip makers and Rambus had previously stopped the widespread adoption of Rambus memory and communications technology.

Rambus says that Samsung’s agreement will help it cut deals with other memory chip makers. As far back as the 1990s, Rambus has focused on creating memory chips that are faster than standard memory chips because they use specially designed and patented interfaces. But many memory chip makers chose to challenge Rambus rather than pay royalties on every chip that they manufactured.

A flood of patent litigation ensued. Beyond that, the government’s antitrust enforcers got involved on both sides, investigating Rambus for alleged anticompetitive practices in the enforcement of its patents, and investigating the memory chip makers for allegedly banding together against Rambus in a price-fixing scheme aimed at making Rambus chips too expensive.

Both Samsung and Rambus are asking courts to drop antitrust claims that the companies had filed against each other. But in the price-fixing case, Rambus still has litigation pending against Hynix and Micron. Analysts have speculated about whether losing the case to Rambus could mean huge damages and bankruptcy for those parties. Hughes said that the company is still willing to talk about a settlement with Hynix and Micron, and that it could work out a payment plant that might not drive those firms into bankruptcy.

“Signing Samsung is pivotal for us because they are the biggest player out there,” said Sharon Holt, senior vice president of licensing and marketing at Rambus. “It lets us put a stake in the ground. We intend to take this momentum and push forward aggressively.”

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