Samsung, Micron, and Hynix hit with class action suit over alleged DRAM price-fixing scheme

[midian182]

Samsung has long relied on its chip business to help the firm to record quarters, but it’s been claimed that the tech giant hasn’t always played by the rules. A class action lawsuit alleges that the company, along with two other major manufacturers, was limiting supplies of DRAM chips to inflate the prices.

The suit was filed in the US District Court for the Northern District of California by law firm Hagens Berman on behalf of US consumers who purchased smartphones and computing products that use DRAM between July 1, 2016, and February 1, 2017.

The suit cites an investigation conducted by Hagens Berman antitrust attorneys that claims to have discovered Samsung, Hynix, and Micron, who collectively make up 96 percent of the global DRAM market, colluded to limit supplies of the chips, resulting in "illegally inflated prices." It was only when the Chinese government announced an investigation into the situation in 2017 that the “conduct changed abruptly,” reads the filing.

Demand for DRAM jumped 77 percent in 2017, following an eight percent decline in 2016. The price of the chips went up 47 percent during the stated time period, according to the law firm, the highest in almost 30 years. As a result, revenue from DRAM sales more than doubled at the three companies.,

“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 Hagens Berman managing partner, Steve Berman. “Instead of playing by the rules, Samsung, Micron and Hynix chose to put consumers in a chokehold, wringing the market for more profit.”

Hagens Berman has been here before. The firm won a $300 million settlement against 18 DRAM manufacturers in a similar suit back in 2006. As noted by Gizmodo, the company has filed suits against Apple, Facebook, Tesla, six major hotel chains, BMW, and Harvey Weinstein, all of them since the start of the year.

If you want to find out more and are thinking about joining the suit, head on over to Hagens Berman’s website.

Permalink to story.

https://www.techspot.com/news/74369-samsung-micron-hynix-hit-class-action-suit-over.html

 

[GeforcerFX]

"Demand for DRAM jumped 77 percent in 2017, following an eight percent decline in 2016. The price of the chips went up 47 percent during the stated time period, according to the law firm, the highest in almost 30 years. As a result, revenue from DRAM sales more than doubled at the three companies."

Pretty sure the explains the vast majority of the price inflation right there. Supply and demand, demand was low so supply was designed to meet that demand plus 10-25% for fluctuation, 77% increase would strain production forcing costs to rise. The expense of setting up new production lines for the chips would be time consuming, and with some of the tech a waste since they are already being replaced in the market by new tech. Could there be fowl play? Sure, but if the demand went up 77% that would explain the price flux a lot better.

 

[Evernessince]

"Demand for DRAM jumped 77 percent in 2017, following an eight percent decline in 2016. The price of the chips went up 47 percent during the stated time period, according to the law firm, the highest in almost 30 years. As a result, revenue from DRAM sales more than doubled at the three companies."

Pretty sure the explains the vast majority of the price inflation right there. Supply and demand, demand was low so supply was designed to meet that demand plus 10-25% for fluctuation, 77% increase would strain production forcing costs to rise. The expense of setting up new production lines for the chips would be time consuming, and with some of the tech a waste since they are already being replaced in the market by new tech. Could there be fowl play? Sure, but if the demand went up 77% that would explain the price flux a lot better.

If you read the article, it's stated twice that they uncovered evidence of the major memory manufacturers fixing prices...

FYI these memory manufacturer's knew Apple and Samsung were releasing new phones during that time (they had to place orders ahead of time of course). The fact that supply didn't increase accordingly during that time is clearly an example of price fixing. DRAM manufacturers instead lowered production instead of increasing it despite knowing the market would be demanding a huge amount in 2017. DRAM prices aren't even expected lax throughout 2018 either.

 

[GeforcerFX]

If you read the article, it's stated twice that they uncovered evidence of the major memory manufacturers fixing prices...

FYI these memory manufacturer's knew Apple and Samsung were releasing new phones during that time (they had to place orders ahead of time of course). The fact that supply didn't increase accordingly during that time is clearly an example of price fixing. DRAM manufacturers instead lowered production instead of increasing it despite knowing the market would be demanding a huge amount in 2017. DRAM prices aren't even expected lax throughout 2018 either.

I saw the claim, never saw them release any proof though. What proof they do have we won't see for 2-3 years at this point, like I said though I never ruled out price fixing but the demand shooting up so quickly had a role in the price hike.

 

[trparky]

Oh sure... let's have a class action lawsuit where us regular folks will be lucky to get a few dollars meanwhile the lawyers walk away with bank.

 

[gamoniac]

If the lawsuit was filed by a government entity, I would be all for it. Instead, it is filed by Hagens Berman law firm. Guess who the winners are going to be?

 

[SirChocula]

Anyone got a list of the phones that uses DRAM?

 

[Puiu]

If you read the article, it's stated twice that they uncovered evidence of the major memory manufacturers fixing prices...

FYI these memory manufacturer's knew Apple and Samsung were releasing new phones during that time (they had to place orders ahead of time of course). The fact that supply didn't increase accordingly during that time is clearly an example of price fixing. DRAM manufacturers instead lowered production instead of increasing it despite knowing the market would be demanding a huge amount in 2017. DRAM prices aren't even expected lax throughout 2018 either.

I saw the claim, never saw them release any proof though. What proof they do have we won't see for 2-3 years at this point, like I said though I never ruled out price fixing but the demand shooting up so quickly had a role in the price hike.

We don't need the article to list out the proof (nobody will do that so stop asking for it ppl ). What we need to know is the eventual result of the lawsuit when it ends. The simple fact that they already won such cases before gives credence to their statement so you can't just ignore what they say crying wolf.

 

[stewi0001]

Oh sure... let's have a class action lawsuit where us regular folks will be lucky to get a few dollars meanwhile the lawyers walk away with bank.

Lawyers are always winners

 

[bohemond1099]

If you read the article, it's stated twice that they uncovered evidence of the major memory manufacturers fixing prices...

FYI these memory manufacturer's knew Apple and Samsung were releasing new phones during that time (they had to place orders ahead of time of course). The fact that supply didn't increase accordingly during that time is clearly an example of price fixing. DRAM manufacturers instead lowered production instead of increasing it despite knowing the market would be demanding a huge amount in 2017. DRAM prices aren't even expected lax throughout 2018 either.

I saw the claim, never saw them release any proof though. What proof they do have we won't see for 2-3 years at this point, like I said though I never ruled out price fixing but the demand shooting up so quickly had a role in the price hike.

DRAM manufacturers have been caught and fined for doing this in the past, if you read the article.

 

[bohemond1099]

If the lawsuit was filed by a government entity, I would be all for it. Instead, it is filed by Hagens Berman law firm. Guess who the winners are going to be?

Can you read? "Hagens Berman has been here before. The firm won a $300 million settlement against 18 DRAM manufacturers in a similar suit back in 2006. "

 

[antiproduct]

Anyone got a list of the phones that uses DRAM?

All smart phones. Possibly some dumb phones as well.

 

[shm224]

"Demand for DRAM jumped 77 percent in 2017, following an eight percent decline in 2016. The price of the chips went up 47 percent during the stated time period, according to the law firm, the highest in almost 30 years. As a result, revenue from DRAM sales more than doubled at the three companies."

Pretty sure the explains the vast majority of the price inflation right there. Supply and demand, demand was low so supply was designed to meet that demand plus 10-25% for fluctuation, 77% increase would strain production forcing costs to rise. The expense of setting up new production lines for the chips would be time consuming, and with some of the tech a waste since they are already being replaced in the market by new tech. Could there be fowl play? Sure, but if the demand went up 77% that would explain the price flux a lot better.

If you read the article, it's stated twice that they uncovered evidence of the major memory manufacturers fixing prices...

FYI these memory manufacturer's knew Apple and Samsung were releasing new phones during that time (they had to place orders ahead of time of course). The fact that supply didn't increase accordingly during that time is clearly an example of price fixing. DRAM manufacturers instead lowered production instead of increasing it despite knowing the market would be demanding a huge amount in 2017. DRAM prices aren't even expected lax throughout 2018 either.

The lawsuit they claim to have "uncovered" is the defendant's public statements to investor -- I personally think these lawyers are really grasping for straw.

The DRAM business had price glut a few years ago (at rock bottom in 2016) and all named companies either suffered heavy loss for many quarters or barely managed to stay afloat. The glut was in part caused by Samsung's effort to gain marketshare, but the company quickly shifted its focus and CAPEX to higher growth NAND for greater profit after the glut. Many industry observers predicted that the future price would go up because the investment in DRAM production either stayed flat or declined as the profit dried up. The DRAM business is very capital intensive business and nobody wants to invest capital when there is no profit to be made. Now that all these companies are making much higher profit, you could likewise expect them to invest more in their DRAM production and the future price would likewise decline as a result, regardless of this class-action lawsuit or regulatory actions. This is simply how the market works.

As for your mobile comments, both Apple and Samsung release new flagship smartphones every year -- in Samsung's case, there are two new flagships. In another words, there may be 3 or 4 new phones released during one DRAM business expansion cycle. Not only does it take longer time for DRAM makers to adjust smartphone maker's release cycles, there was hardly any incentive to increase production after the production/price glut in 2015-2016 when the price had hit rock bottom and most of DRAM makers weren't making profit. Further, there is really hardly any evidence of "price fixing" which implies collusion between competitors. Hagen Berman's lawsuit relies on shady claim that the DRAM companies signaled each other in "public statement."

 

[Evernessince]

The lawsuit they claim to have "uncovered" is the defendant's public statements to investor -- I personally think these lawyers are really grasping for straw.

The DRAM business had price glut a few years ago (at rock bottom in 2016) and all named companies either suffered heavy loss for many quarters or barely managed to stay afloat. The glut was in part caused by Samsung's effort to gain marketshare, but the company quickly shifted its focus and CAPEX to higher growth NAND for greater profit after the glut. Many industry observers predicted that the future price would go up because the investment in DRAM production either stayed flat or declined as the profit dried up. The DRAM business is very capital intensive business and nobody wants to invest capital when there is no profit to be made. Now that all these companies are making much higher profit, you could likewise expect them to invest more in their DRAM production and the future price would likewise decline as a result, regardless of this class-action lawsuit or regulatory actions. This is simply how the market works.

As for your mobile comments, both Apple and Samsung release new flagship smartphones every year -- in Samsung's case, there are two new flagships. In another words, there may be 3 or 4 new phones released during one DRAM business expansion cycle. Not only does it take longer time for DRAM makers to adjust smartphone maker's release cycles, there was hardly any incentive to increase production after the production/price glut in 2015-2016 when the price had hit rock bottom and most of DRAM makers weren't making profit. Further, there is really hardly any evidence of "price fixing" which implies collusion between competitors. Hagen Berman's lawsuit relies on shady claim that the DRAM companies signaled each other in "public statement."

DRAM manufacturers don't figure out demand the year of, Samsung and Apple most certainly ramped production up far ahead and had a contract inked with DRAM supplied even before that. Obviously large companies want to secure part sources far ahead of ramp up or release. I don't buy that they didn't have far advance notice to predict future demand.

How exactly do you know the lawsuit relies solely on public statements? What experience do you have in law to make such claims over an experienced class action lawyer? How exactly does the profit margins of these companies impact the legally of anything?

 

[gamoniac]

Can you read? "Hagens Berman has been here before. The firm won a $300 million settlement against 18 DRAM manufacturers in a similar suit back in 2006. "

Yes, but it's okay. Not everyone gets it.