DRAM makers facing potentially heavy fines in China

CAT-THE-FIFTH

CAT-THE-FIFTH

CAT-THE-FIFTH

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The fines might be upto $8 billion:

https://digitimes.com/news/a20180614PD212.html

Samsung Electronics, SK Hynix and Micron Technology - the world's top-3 DRAM vendors - could be fined up to US$8 billion in China over alleged price fixing, according to industry sources.

DRAM prices have been rising since 2017, putting pressure on China-based smartphone vendors' profitability. The issue has already drawn the attention of China's Anti-Monopoly Bureau of Ministry of Commerce, which met with Samsung to express its concern in December 2017. Nevertheless, such intervention did not stop DRAM prices from rising further in the first quarter of 2018, the sources indicated.

In May 2018, the Chinese antitrust regulators met with another major DRAM supplier, Micron, to express concerns about the continued DRAM price rally. Later, the regulators launched investigations into Samsung, SK Hynix and Micron, which collectively hold an over 90% share of the global DRAM market, the sources said.

Samsung, SK Hynix and Micron have all confimed the visits of China's antitrust regulators to their local offices. The companies said they would cooperate but did not elaborate.

According to China's antitrust law, Samsung, SK Hynix and Micron could be fined between US$800 million and US$8 billion if found to have engaged in price fixing, the sources noted. The estimated fines are based on their DRAM sales to China in 2016-2017.

The three DRAM vendors, along with Infineon and Elpida Memory, were previously fined by the US for price fixing practices between 1999 and 2002. Infineon has already exited the DRAM business, while Elpida was later acquired by Micron.

China has become the largest consumer of DRAM memory. The country imported US$88.92 billion worth of memory chips in 2017, up nearly 40%. As a result, China's antitrust authority is being encouraged to launch a price-fixing probe like the one that took place in the US in 2002, after receiving a complaint submitted jointly by China's local smartphone and other consumer technology product vendors, the sources said.

Meanwhile, China is striving to raise the country's IC self-sufficiency rate. A few memory startups, such as Yangtze Memory Technologies (YMTC), are being financially supported by their local governments to develop production technologies in-house. By intervening in the memory prices, China also intends to protect its local memory chipmakers' bargaining power in the future, the sources said.
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Zeed said:
KEY words for friday are:
potentially and might

Today Potentiallty I Might win a Lottery :D
Click to expand...

This action by the Chinese Antitrust Regulators has been taken under the umbrella of a totalitarian state, so of course the authorities will win. The only real question is how big the fines will be.
So yes Zeed, you stand a better chance of winning the lottery than the ram companies do of walking away without a big fine :D
 
kitfit1 said:
This action by the Chinese Antitrust Regulators has been taken under the umbrella of a totalitarian state, so of course the authorities will win. The only real question is how big the fines will be.
So yes Zeed, you stand a better chance of winning the lottery than the ram companies do of walking away without a big fine :D
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True they dont **** about in china or russian they get stuff SORTED.
They can just be like Pay or GTFO and they will pay nothing will change and everybody (besides US end customers) will live happily ever after :D
 
In fact,here are some articles on what was behind the Chinese price-fixing investigation:
https://digitimes.com/news/a20180614PD212.html

Samsung Electronics, SK Hynix and Micron Technology - the world's top-3 DRAM vendors - could be fined up to US$8 billion in China over alleged price fixing, according to industry sources.

DRAM prices have been rising since 2017, putting pressure on China-based smartphone vendors' profitability. The issue has already drawn the attention of China's Anti-Monopoly Bureau of Ministry of Commerce, which met with Samsung to express its concern in December 2017. Nevertheless, such intervention did not stop DRAM prices from rising further in the first quarter of 2018, the sources indicated.

In May 2018, the Chinese antitrust regulators met with another major DRAM supplier, Micron, to express concerns about the continued DRAM price rally. Later, the regulators launched investigations into Samsung, SK Hynix and Micron, which collectively hold an over 90% share of the global DRAM market, the sources said.

Samsung, SK Hynix and Micron have all confimed the visits of China's antitrust regulators to their local offices. The companies said they would cooperate but did not elaborate.

According to China's antitrust law, Samsung, SK Hynix and Micron could be fined between US$800 million and US$8 billion if found to have engaged in price fixing, the sources noted. The estimated fines are based on their DRAM sales to China in 2016-2017.

The three DRAM vendors, along with Infineon and Elpida Memory, were previously fined by the US for price fixing practices between 1999 and 2002. Infineon has already exited the DRAM business, while Elpida was later acquired by Micron.

China has become the largest consumer of DRAM memory. The country imported US$88.92 billion worth of memory chips in 2017, up nearly 40%. As a result, China's antitrust authority is being encouraged to launch a price-fixing probe like the one that took place in the US in 2002, after receiving a complaint submitted jointly by China's local smartphone and other consumer technology product vendors, the sources said.

Meanwhile, China is striving to raise the country's IC self-sufficiency rate. A few memory startups, such as Yangtze Memory Technologies (YMTC), are being financially supported by their local governments to develop production technologies in-house. By intervening in the memory prices, China also intends to protect its local memory chipmakers' bargaining power in the future, the sources said.
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https://www.bloomberg.com/news/arti...-chipmakers-are-fixing-prices-again-quicktake

China is investigating the world’s biggest manufacturers of memory chips to determine whether they illegally conspired to prop up prices, a high-stakes probe that could rattle the technology industry and exacerbate global trade tensions. Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. have all confirmed that Chinese government officials visited their offices, without providing details of the probe. Chinese regulators haven’t disclosed precisely what they are looking for or what evidence they have uncovered. The inquiry comes just as the U.S. and China clash over trade practices, with the Trump administration announcing tariffs on $50 billion of imports and China responding with similar tariffs on hundreds of American products.

1. What do we know about the investigation?

Samsung, the world’s largest chipmaker, Hynix and Micron all said Chinese investigators visited their sales offices in that country on May 31. Together, the three companies control more than 90 percent of the market for dynamic random access memory, or DRAM, chips, which are used to help process data in smartphones, tablets and other devices. All three said they will cooperate with the investigations.

2. Why would China suspect price fixing?

Unlike most electronic components, DRAM chips are openly traded on markets with public pricing -- and there’s been unusual activity in recent months. Prices tend to fall over time as the cost of production goes down and new higher-capacity models replace their predecessors. But last year, prices surged, with a 47 percent jump in the price-per-bit of DRAM that market researcher IC Insights calculates was the largest annual increase since 1978. Samsung, Hynix and Micron say this is simply because of supply and demand -- every customer wants better performance as the creation of videos, photos and gaming causes a surge in data processing. “The pricing rally that the DRAM market has seen over the last two years has clear supply and demand drivers,” said Mike Howard, vice president of memory research at French researcher Yole Developpement.

3. Don’t the chipmakers control supply?

They do have some control. Growth in DRAM bit volume rose 20 percent in 2017, just half the 40 percent rate in 2016, according to IC Insights. DRAM makers were convicted of market manipulation some 15 years ago, with some executives sent to jail. Since then the number of suppliers has shrunk by about half to the three companies under investigation, making potential coordination easier. In addition, chipmaker profits are at record highs: The semiconductor division of Samsung posted an operating profit of 35.2 trillion won on revenue of 74.3 trillion won last year -- a 47 percent profit margin.
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China imports nearly $90 billion of DRAM each year,and the price increases were affecting their companies. Also the increase in prices for DRAM last year were the biggest increases for 40 years!!

There is also a class action lawsuit happening in the US regarding possible price fixing too:

https://www.theregister.co.uk/2018/04/30/dram_vendors_sued_again_for_price_fixing_again/
https://hothardware.com/news/samsung-hynix-and-micron-dram-class-action-suit-collusion

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.
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https://www.hbsslaw.com/cases/dram-...f-smartphones-computers-and-other-electronics

Here is the document:

https://www.hbsslaw.com/uploads/case_downloads/dram2/2018-04-27_dram_class_action_complaint.pdf
 
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