Samsung Electronics is set to more than double its output of Rambus DRAM (dynamic random access memory) chips after Intel agreed to make an investment in Samsung's manufacturing operations.
The size of Intel's investment in Samsung's Rambus DRAM production was not disclosed, although the South Korean company said it will be able to "turn out at least 10 million Rambus DRAM (chips) a month," from March as a result of the investment. Following the initial production increase, Samsung is planning to push production up to 20 million 128M-bit chips per month during the second half of the year, it said in a statement.
The investment is important to both companies. By pumping money into Samsung, Intel can ensure a steady supply of Rambus DRAM chips, which are used with its Pentium 4 chipset but only produced by a handful of chip manufacturers. Any interruption in supply or failure by chip manufacturers to keep up with demand could affect PC shipments and in turn hurt Intel.
With the extra money, Samsung can increase production and maintain market share in the fast-expanding market. Last year the company said it had a 53 per cent share of the world Rambus DRAM market, a market that is expected to expand to 300 million chips as Pentium 4-based systems become more common.
Of the 300 million chips that Samsung said it expects to see shipped from all vendors, 250 million will be used in Pentium 4 systems while the remaining 50 million will be used in games systems, principally Sony Computer Entertainment's PlayStation 2 system.
Tuesday's investment, which will be officially announced at the Intel Developer Forum in San Jose, is not the first time that Intel has injected money into Samsung's Rambus DRAM production. In early 1999 the company bought $US100 million in Samsung convertible bonds, exchangeable for 1 per cent of Samsung Electronics common stock, and Samsung used to money to make its initial investment in Rambus DRAM production facilities.