Samsung, SK Hynix, Micron sued over alleged price-fixing of RAM
What's the story
Samsung, SK Hynix, and Micron, the world's top three memory suppliers, have been sued for alleged price-fixing of RAM. The lawsuit comes amid a global RAM shortage and rising costs due to increased demand from the AI sector. The complaint was filed in a California federal court by individual and business consumers who claim that these companies violated multiple US laws.
Legal claims
Plaintiffs allege collusion began in 2022
The plaintiffs allege that Samsung, SK Hynix, and Micron began colluding to fix DRAM supply and prices in 2022. They claim this was due to low demand at the time, which led to a price increase of about 700% over four years. The lawsuit further alleges that these companies "simultaneously cut production," coordinated a shift toward high-bandwidth memory (HBM), and exited older DDR3/DDR4 modules while conventional DRAM supply dwindled as prices rose.
Market dynamics
Memory suppliers prioritizing HBM over regular DRAM
HBM is extensively used in AI data centers, with AI companies reportedly willing to pay massive amounts for it. This could have prompted memory suppliers to prioritize HBM over regular device memory. Earlier this year, Micron announced its decision to shut down its consumer memory division, Crucial, entirely and focus on AI clients instead. The company has already signed 16 new agreements for memory supply until 2030.
Legal action
Plaintiffs seek treble damages and injunctive relief
The plaintiffs in the lawsuit are seeking injunctive relief to "remedy the ongoing effects of defendants' unlawful and anticompetitive conduct," along with treble damages, litigation costs, and legal fees. They also argue that no new competitor can easily enter this market due to high costs of setting up a DRAM fabrication plant ($15 billion-$20 billion) and years required for construction. The complaint states that when these three firms restrict supply, no outsider can expand output to undercut them.
Past incidents
Previous price-fixing conspiracy involving Samsung, SK Hynix
The lawsuit also cites a US Department of Justice investigation into an alleged conspiracy from 1998 to 2022, wherein Samsung and SK Hynix pleaded guilty and paid fines of nearly $300 million and $185 million, respectively. Micron avoided a fine by reporting the conspiracy and cooperating with prosecutors in this case. The plaintiffs argue that this is not the first such case involving these companies.