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Rambus pulls semis lower
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July 26, 2000: 2:38 p.m. ET
Memory technology supplier falls as Intel endorses alternative systems
By Staff Writer Richard Richtmyer
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NEW YORK (CNNfn) - Rambus was leading a broad decline in semiconductor stocks Wednesday on news that Intel has endorsed competing memory standards for its new family of Pentium microprocessors set to hit the market in 2001.
Shares of Rambus (RMBS: Research, Estimates) - which makes money by licensing its memory design architecture, called Rambus Direct Dynamic Random Access Memory, or RDRAM - fell 11-1/4, or 13.2 percent, to 73-3/4.
Earlier in the week, Intel told its customers that it would build chipsets for its Pentium 4 microprocessors that support RDRAM as well as PC133 memory, currently the most commonly used in personal computers.
The chipset is a group of circuits that provides the electronic interface between the microprocessor and the other parts of the computer system such as its memory, display and storage systems.
 "We're making changes to our roadmap for processors in 2001 in order to provide some additional memory options for the low-cost platform for Pentium 4-based systems for the mainstream market," Intel spokesman Chuck Mulloy told CNNfn.com.
For computer makers, the move is significant because systems with PC133 memory systems are less expensive to manufacture. It's also significant for Rambus because prior to this decision, Intel had planned on using RDRAM exclusively.
"My theory on Rambus has always been that they live and die on Intel's largess," said Drew Peck, semiconductor analyst at SG Cowen.
"It would be virtually impossible, I believe, for Rambus to prevail in the marketplace with RDRAM without Intel's unequivocal support," Peck added. "And they are anything but unequivocal at this point."
Mulloy said Intel still will use direct RDRAM as its primary memory solution because it provides the optimal performance for the Pentium 4. The new chipsets have been added to support lower-end systems. The company also is considering using Double Data Rate, or DDR, as a possible memory alternative, he said.
Shares of Intel (INTC: Research, Estimates) were off 2-15/16, or 2.1 percent, at 137-15/16. Meanwhile, Advanced Micro Devices (AMD: Research, Estimates), Intel's chief rival in the PC microprocessor marketplace, fell 4-3/8 to 74-3/8, a 5.6 percent decline.
SG Cowen's Peck said Intel's decision to use alternatives to RDRAM takes away some of the competitive advantage AMD has gained against its much larger rival.
"The fact that Intel had painted themselves into a corner with this Rambus issue was actually a benefit to AMD," he said. "Intel is clearly starting to distance itself from its commitment to Rambus, and that's bad for AMD. The advantage that AMD has, and one of the reasons they were capturing a significant amount of market share, especially in Taiwan, is going to be less of an issue moving forward."
 Wednesday's selling in chip stocks spread well beyond Rambus, Intel and AMD, though. The Philadelphia Stock Exchange's semiconductor index, or Soxx, was off 83.07, or 7.5 percent, at 1021.21.
LSI Logic (LSI: Research, Estimates) shares also were among those hard hit. They fell 8-1/16 to 32-7/16, a 19.9 percent decline.
After Tuesday's closing bell, the company reported a second-quarter operating profit of 29 cents per share, meeting Wall Street's expectations. But its revenue for the quarter was less than expected, prompting downgrades from several analysts.
Other big decliners included National Semiconductor (NSM: Research, Estimates), off 5-7/16, or 12.3 percent, at 38-11/16; Actel (ACTL: Research, Estimates), which slipped 8 points to 38-7/8, a 17 percent decline; and Cirrus Logic (CRUS: Research, Estimates), which was trading 1-7/16, or 7.5 percent, lower at 17-13/16. 
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