Chinese Government Investigates DRAM And NAND Price Fixing Allegations

Surging NAND flash and DRAM memory chip pricing has prompted China's economic regulator to look into whether or not suppliers such as Samsung and others have engaged in price fixing shenanigans. The chips in question are found in a variety of electronics products, most notably mobile phones, which use both NAND flash and DRAM ICs for permanent and temporary storage duties.

"We have noticed the price surge and will pay more attention to future problems that may be caused by 'price fixing' in the sector," said Xu Xinyu, an official with the Pricing Supervision Department of the National Development and Reform Commission. He did not elaborate on the matter.

Memory Chips

Wang Yanhui, secretary general of the Mobile China Alliance, told China Daily that the commission has already spoken to Samsung, which is the world's top manufacturer of storage chips. According to Yanhui, the commission has not launched an official investigation into Samsung's practices, it has only spoken with the firm. It is too early to tell if further action will be taken, either in regards to Samsung and/or with other companies.

The commission's interest in Samsung seems to be two-fold. Back in 2005, the United States Department of Justice (DOJ) slapped Samsung with a $300 million for its participating in a price fixing scheme. And as a major player in the storage chip market, Samsung is perhaps benefiting the most from rising prices. The report points out that Samsung collected $54.4 billion in revenue in the third quarter of 2017, up nearly 180 percent year-over-year, though that includes more than just memory chips.

"Normally the pricing regulator, the NDRC will deal with complaints after receiving them," said Roger Sheng, an analyst at Gartner Research. "It is hard to predict why the government would take action at this point, after the price has increased for such a long time."

The commission received complaints from mobile phone manufacturers earlier in 2017, which would explain why it's now looking into the situation. That said, Sheng doesn't think that any of this will have an effect on how chip makers price their products, as demand continues to be high.

Interestingly enough, DRAMeXchange is forecasting a drop in NAND flash chip pricing. Thanks to increased production and the seasonal downturn, DRAMeXchange estimates that overall demand will fall by 15 percent this quarter, compared to the previous quarter, which could lead to lower prices.
Tags:  NAND, DRAM, Price Fixing