Samsung, Hynix And Micron Slapped With Class Action Suit Over DRAM Supply Collusion And Price Gouging

memory chips
Price fixing in the DRAM market is nothing new unfortunately. As recently as January this year, a Chinese regulator accused Samsung other chip manufacturers of artificially increasing prices to pad their margins. Samsung is also no stranger to price fixing, as a $300 million judgement against it and Hynix was handed down in 2006 here in the United States.

Today, however, Samsung and other DRAM manufacturers are facing another legal fight in the U.S., and it comes courtesy of the law firm Hagens Berman. A class action lawsuit was filed today in U.S. District Court for the Northern District of California and alleges that Samsung, Micron and Hynix conspired to artificially limit the supply of DRAM chips in an effort to keep prices high. As a result, device manufacturers that rely on DRAM chips had to pay inflated prices, and those costs were of course passed on to you, the consumer. This has especially been true as higher DRAM costs have also resulted in inflated prices for graphics cards that PC gamers have been clamoring for, and paying dearly for recently, versus cryptocurrency miner demand for the product.

DRAM spot prices by density

According to Hagens Berman, the above trio of companies together command 96 percent of the DRAM market currently. Their actions resulted in the price of 4GB of DRAM jumping 130 percent during the class period (July 1, 2016 through February 1, 2018). Interestingly enough, the trio of chip manufacturers also experienced more than a doubling in revenue between Q1 2016 and Q3 2017. How convenient…

The lawsuit outlines the behavior, stating:

Defendants each made public statements affirming their commitment to the common plan to curtail supply, and to not compete for each other’s market share by supply expansion. For example, Defendants informed the other Defendants through public statements, that they would keep total wafer capacity flat in order to constrain DRAM supply growth, they would only grow DRAM supply between 15-20% in 2017, even as DRAM demand grew 20-25%, and that they would refrain from taking each other’s market share. 

It is also alleged that even though prices for DRAM more than doubled during the class period, the costs for Samsung, Micron and Hynix associated with producing the memory chips did not increase. Likewise, there were no major changes in process technology to justify the drastic increase in prices.

If the Hagens Berman name sounds familiar, it’s because it was also the firm responsible for securing the aforementioned $300 million settlement against Samsung and Hynix. So, it has the experience in this type of litigation and the investigative know-how to see this case through to its eventual resolution.

DRAM contract spot prices

“What we’ve uncovered in the DRAM market is a classic antitrust, price-fixing scheme in which a small number of kingpin corporations hold the lion’s share of the market,” said Steve Berman, who serves as managing partner at Hagens Berman. “Instead of playing by the rules, Samsung, Micron and Hynix chose to put consumers in a chokehold, wringing the market for more profit.”

What makes this case (PDF) so interesting is the breadth of devices it covers. Since DRAM is used in just about all of our computing devices, if you purchased a new smartphone, tablet, or computer in the past two years, you're probably able to join in on the lawsuit, which is seeking class action status. To inquire more about the class-action, including how to sign-up, you can visit the following link.