Print 28 comment(s) - last by Captain Orgazm.. on Feb 10 at 6:58 PM

U.S. government approaches $1-billion USD in fines from DRAM companies

In a settlement, Samsung agreed today to pay $90 million USD for participating in illegal DRAM price-fixing practices. Samsung and several other major DRAM companies were all caught up in bitter court ordeals involving business conspiracies that affected the bottom line for several major OEMs and system integrators. Originally Samsung was excluded from the list of manufacturers that faced lawsuits:
  • Elpida Memory (Japan)
  • Hynix Semiconductor (South Korea)
  • Infineon Technologies AG (Germany)
  • Micron Technology (USA)
  • Mosel Vitelic (Taiwan)
  • Nanya Technology Corp. (Taiwan)
  • NEC Electronics America (USA)
Despite being last to be on the list, there seems to be no escape for all the major DRAM companies. For all of 2006, Samsung was under heavy investigation, all while the fines were accumulating. In fact, the U.S. government fined a total of $731 million USD in 2006 for DRAM price-fixing. The price fixing scheme caused major OEMs to pay higher than normal prices for memory and those costs were then passed on to customers. Had all the major DRAM companies actually remained competitive, DRAM prices would have been lower.

Of the $90 million USD that Samsung must pay, $80 million of it will be returned back to those affected by the schemes, while the balance will be distributed among local and state government bodies. For Samsung, the new fine will be something familiar to the company.

In 2005, Samsung was ordered by the U.S. Department of Justice to pay roughly $300 million USD in a separate case.

Most of the above companies have not just faced the U.S. government in court, but also Rambus for patent infringement cases -- not coincidentally Rambus provided much of the key evidence against these DRAM manufacturers in this and other DRAM antitrust cases.

Late last year, Micron had claimed Rambus was not playing fair in the DRAM market and filed a suit against Rambus for abusive business practices. Interestingly, in August of last year, the FTC also claimed that Rambus unfairly monopolized the DRAM market. The FTC decided yesterday to heavily slash the royalties on certain DRAM that Rambus makes its licensees pay.

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Where do we win in all this?
By cubby1223 on 2/7/2007 8:04:53 PM , Rating: 2
Or do we consumers just lose out as always?

We were the ones ultimately paying the high price of ram, so those who receive this settlement just get to pocket the money.

And guess what, we'll have to pay more for the ram in the future to make up for the massive amounts the memory manufacturers have lost.

Does that about sum it up? Or am I wrong somewhere? We pay more during price fixing, and we still pay more after the settlement.

RE: Where do we win in all this?
By Chadder007 on 2/7/2007 8:18:38 PM , Rating: 1
You are right...Its all just about the government getting money and having control. Its not helping the consumers at all.

RE: Where do we win in all this?
By shabby on 2/7/2007 8:44:12 PM , Rating: 2
Im sure they'll think twice about doing it again, so in that case it does help out in future.

RE: Where do we win in all this?
By Whedonic on 2/7/2007 9:33:14 PM , Rating: 2
We can only hope...ram prices have been ridiculous for a long time.

RE: Where do we win in all this?
By Captain Orgazmo on 2/7/2007 9:54:03 PM , Rating: 2
DRAM prices are a bloody joke in the last few years... to pay much more for memory than for a processor should make some eyebrows go way up. Fining these companies might make them try to behave better in the future (or at least gouge less, or hide their profits better), but the real solution lies in public floggings. To have the CEOs of these companies lined up in Times Square with their pants around their ankles, and then whipped vigorously upon the buttocks in front of jeering, vegetable-armed masses (plus the event being broadcast live on all major networks) would certainly make them (and future CEOs) think twice before engaging in nefarious business activities.

RE: Where do we win in all this?
By outsider on 2/7/07, Rating: -1
RE: Where do we win in all this?
By shimman on 2/8/2007 8:49:31 AM , Rating: 2
since last few years, d-ram manufacturers are supposed to be clean from the price-fixing, so claiming that those d-ram manufacturers had to do something with the price hikes is not so valid.

one of the main reason that d-ram manufacturers made trust is rambus's rd-ram which was ridiculously expensive at the time not only because d-ram manufacturers felt that they should kill the rd-ram standard, but also because the royalty price set by rambus was way too high. in the end, rd-ram was killed which is a good thing otherwise we would be paying FAR more than right now with ddr2

d-ram business's operational margins are ultra thin & only few manufacturers experienced in such a commodity market can break even, so there are many price follows are going on which is perfectly legal.

btw, the reason c2d & price increase of ram has something to do with c2d not the funny bussiness with d-ram manufacturers because only ddr2 platform was p4 which wasn't really popular & am2 platfor from amd wasn't really popular either, so sudden increase of demand was made by c2d; d-ram manufacturers are in bussiness of making profit, so you cannot really blame them for charging more when there are more demands

speaking of fines, the ones who are hacked up by this alleged price fixing isn't us, consumers, but those pc makers who charge increadable prices (if you ever bought ram from apple, dell, hp, gateway, etc you know what i mean) for a pair of sticks of rams

so i think, our lovely government is trying to take too much credit.

By Captain Orgazmo on 2/10/2007 6:58:50 PM , Rating: 2
I mostly agree with you. Much of my comment was hidden sarcasm (mainly to see how many would take the "down with the evil corporations" bait and run with it...). Still, seeing as 64 bit programs use twice as much memory, and 2GB is just enough for XP with modern apps and games, that means that you will need 4 GB for Vista 64 with Aero and DX 10 games / HD encoding. 4GB of DDR2 will cost $400-600 CAD for low to mid range stuff, and $800+ for high quality overclocking stuff... and also, where the heck are the 2GB sticks? I don't want to run 4 sticks to get 4GB (no command-per-clock (1T); many mobos have the ram slots jammed together so mem with heatsinks wouldn't fit, or airflow would be terrible, resulting in hot, unstable memory). So that means I pay $500 for memory, and $250 for a processor? Bloody hell, I am waiting to upgrade.

RE: Where do we win in all this?
By somerset on 2/8/2007 11:57:42 AM , Rating: 2
Of course we lose out as always... Thus the term "always" applies.

the government gets the money?
By collegeguypat on 2/8/2007 2:00:03 AM , Rating: 2
Ok, if i understand this correctly...

1) company price fixes ram prices

2) we (the consumer) pay too much (+ tax where applicable)

3) government fines them for price fixing

4) government keeps the money from the fine

So basically if we already purchased ram at the price-fixed price, we're screwed, but somehow the government gets the money we were overcharged (or something like that). We the consumer only get the government assurance of "well I hope the company doesn't do that again"?

I don't get it. Maybe its because I'm an Engineer... If anyone can fill in any blanks and clarify that for me it would be appreciated.


By pillagenburn on 2/8/2007 4:10:31 AM , Rating: 2
This is the nature of government (of any political persuasion, Democrat, Republican, Socialist, Green etc). Find economic activity that consumer/private interests engage in, that CAN be taxed (note, i did not say SHOULD be taxed), then tax the ever loving sh*t out of it.

In this case, the government taxed the consumer for getting screwed on the prices of DRAM (hence why we're not seeing any of that $7xx million settlement).

Keep this in mind next time you set foot into the "voting" stall, i mean booth.

RE: the government gets the money?
By shimman on 2/8/2007 9:11:54 AM , Rating: 2
the assurance of not doing it again come witht he fine. the message from the government is "do that again, i will fine you again"

the missing link is that we, consumers, got screwed is not compensated but those companies who claimed would received the compensation such as apple, dell, hp, gateway, etc

we might as well sue those pc manufactuers for over charing us.

btw, price fixing isn't uncommon. recent one who got fined was riaa, i believe, for price fixing of records. i think there are many who are fixing the prices. gas prices had gone up high, then backed down again little right before the election; it's not like the oil companies having higher cost for the production, but the price is going up. the price of cable television has gone up greatly even if they are regulated. i think it has something to do with lobbists who made trust with the government

By Hawkido on 2/8/2007 2:45:19 PM , Rating: 2
gas prices had gone up high, then backed down again little right before the election; it's not like the oil companies having higher cost for the production, but the price is going up.

This is a false fact. The price per barrel was skyrocketing. So, yes, the production cost had gone up for fuel refining. If you think the President had anything to do with the cost of crude, think again... Go ahead and name the oil producing countries that support Bush... what did you get to? Zero... that's what I thought. The OPEC countries dropped prices right before the election to keep Americans from electing officials who would commit to something radical concerning OPEC countries like harsh economical sanctions. Trust me OPEC countries want Bush and republicans to have as little support as possible. US oil refineries (per the study last year have been working on the same profit margin (little variance) for the last decade. The only thing that has changed much is the price of crude and the taxes leveed on the refining process. If you want the price of gas to drop just have congress whack the 40 cents per gallon tax they have on it.

Gas is $2.00/gallon here. 40 cents is tax. If oil is $50 per 50 gallon barrel, and the refining process is 100% efficient that accounts for 70% of the cost right there. I assure you the refining yield of gasoline from crude petroleum is at best 40 to 50% (they extract other products such as diesel and petroleum jelly to reduce waste.) So in your head how much is their margin? about 5 to 9 cents on the gallon is what the study showed. Why did they make record profits? Because demand was so high and regulations on fuel quality were relaxed to aid in fuel production.
The base problem is enviral nut cases out there saying no more refineries. Well guess what? They are the same people saying don't eat meat, why are gas prices so high, surrender to Islamo-terrorists, don't drill for oil in our country because the 120 known animals in ANWR MIGHT have to migrate away from the 400 or 500 acres at most (out of more than a million) needed to pump and pipe the oil out of there. Puhleeze! The oil pipline, currently in Alaska, has spilt more oil from Enviral terrorists trying to destroy it, than it has accidentally.

Remember the guy who shot a whole in it, to prove that it could be done, and thus it was a threat to the environment? Real Man of Genius(tm) there.

The base point here is that you confuse the refiners with the producers. Yes, the producers fix the prices. That is what the OPEC does. It is in their charter. Don't blame Exxon et al because the price per barrel goes up, and keep in mind, Your government taxes the crap out of the refiners in America, not because the refiners are greedy and "need to be punished!" but because they don't want the stupid American to realize that they just upped his/her taxes. Most ignorant people say "hell yeah, tax those greedy bastiches!" not even realizing they just got screwed out of another $100 to $150 a year.

Don't fall for the political spin, its not a merry-go-round, it is a meat grinder.

By senbassador on 2/9/2007 6:33:07 PM , Rating: 2
I would imagine for the consumers to get reimbersed, one would have to still have the original recipt, and who does that anyway. At most, the people who got screwed would have to file a class action lawsuit; but this here is a fine. And even then, the lawyers would eat up a good chunk.

Not to mention, how do INDIVIDUALS prove that they were victims of price-fixing. Say you were lucky enough to get dicounted RAM from somewhere, do you still get reimperburst. Even if you overpay, how do you prove that it was the price-fixing and not the retailer, or someone else, doing the overcharging.

Since theres no clear target, the only evidence is that there were consumers as a whole getting ripped off. Therefore the state gets to sue, not the consumers.

Think of it this way, if McDonalds violates some health code violation and theres evidence of that, but no evidence showing on what particular day or location the damage would have been done, how do you reimberse the consumers. Everyone living in a certain area who have McDonald's recipts ranging from date A to date B get a refund. No, they just have to pay a fine to the state.

Samsung Again
By SilverBack on 2/8/2007 10:08:05 PM , Rating: 2
Shares of LCD makers such as LG.Philips and Samsung Electronics plummeted in overseas trading after news broke that both Japanese and U.S. regulators were looking into complaints about price-fixing. The probe apparently centers on thin-film transistor or TFT LCDs. Samsung, LG.Philips and NEC are the top worldwide producers of the screens.

Sound familiar?
I would imagine prices will plummet on memory as they did on LCD's.

RE: Samsung Again
By ajdavis on 2/9/2007 10:48:24 AM , Rating: 2
That sounds like a probe... not exactly a cut and dry case.

consumer loses big surprize
By knowom on 2/7/2007 9:50:13 PM , Rating: 2
The price premium on high end items is ridiculous in a lot of cases like 5-25% performance difference usually if your lucky for usually upwards of double or triple the price is such a gimmick if anything they should start rewarding the people buying the high end stuff over than low end junk by giving them better price for performance deals. Hopefully ram prices will decline again eventually, but probably won't be anytime soon maybe some of the not so big name ram companies will help with that if they start getting more competitive.

By Montrevux on 2/7/2007 9:57:57 PM , Rating: 2
I thought RAM prices were unusual.

By piloteer on 2/8/2007 12:04:11 AM , Rating: 2
Pray how will refund to RAM buyers be administered ? Bought RAM in India, last 2 years !!.

By knowitall on 2/8/2007 7:25:09 AM , Rating: 2
This is the way the government makes up for some of the losses in Iraq. Where else would the government get 9.9 billion dollar a month to spend on the war without pocketing some of consumers money. If they were thinking about us they would do something like give a mail in rebate to all memory buyers

By menting on 2/8/2007 10:38:00 AM , Rating: 2
Not only did the C2D and AM2 spur an increase in DRAM, putting it in tight supply, companies transistioning to new processes recently also hurt the yields. Not only that, since Flash is the new darling right now, a lot of companies are moving a big chunk of their fab production over there as well, thus cutting down DRAM supplies even more. I know because I work in one of those companies.

By encryptkeeper on 2/8/2007 11:05:24 AM , Rating: 2
According to Kingston's price list, my company's cost of 512 ddr2 667 sticks just went from 50 bucks to 36 bucks. This just happened in the last week. I hope memory will stay low.

Price fixing Deja Vu.
By pugster on 2/8/2007 12:21:56 PM , Rating: 2
It reminds me of same problem when the memory manufacturers decide to fix the price of ram a few years back. The computer manufacturers ended up cutting the amount of ram from 256mb to 128mb on the low end machines running on windows xp. Since last year we saw the price of flash memory tanked while computer memory stay the same. Microsoft can blame on the memory manufacturers because most people can't afford $400 for 2gb of memory to run Vista.

By jsmithy2007 on 2/7/07, Rating: -1
RE: Sorry....
By Duwelon on 2/7/2007 10:58:50 PM , Rating: 3
I don't know all the dynamics of price fixing but it doesn't take more than two brain cells to understand it's not just bad for consumers, it's unfair. When companies price fix your giving them more money than they've actually earned.

RE: Sorry....
By xNIBx on 2/8/2007 2:38:22 AM , Rating: 2
You are wrong. I used to be able to buy 2gB of ddr2 800mhz for 200euros almost 1 year ago. But then, c2d came out and ram price increased by 50% and for a long while you couldnt find 2gB ddr2 800mhz for less than 300euros(now you can probably get it for 250euros).

This price increase cant be justified by the demand increase since the production of ddr2 is A LOT more efficient and cheaper right now than it was 1 year ago. The fact that they can produce 1200mhz ram, shows how easy and cheap it is for them to get 800mhz high latency ones. Yet the price of 800mhz ddr2 ram remains the same. Ram prices are manipulated and if you dont know, dont speak.

And no, it isnt the enthousiastic market that enables them to charge that much. I am not talking about low latency 1200mhz ddr2 ram, i am talking about value 800mhz ram. In motherboards for example, you can get a mobo for c2d for less than 100euros but you can also get a mobo for c2d for almost 300euros. Same deal with the gpus and the cpus.

Enthousiast market doesnt affect mainstream market prices, the same way ferrari prices dont affect fiat prices. The market cant self adjust itself when it is a freaking monopoly.

RE: Sorry....
By mjz on 2/8/2007 8:46:47 AM , Rating: 2
thank you.. its soo true, how does price go up?? I find it funny that video cards with 512 MB ram are almost cheaper than just buying basic DDR2 sticks. it seems 100 times easier and cheaper to make ram when compared to videocards, cpu, and even hard drives.

i want 2 gigs for 100 dollars already

RE: Sorry....
By shimman on 2/8/2007 9:01:45 AM , Rating: 2
the price is set by the demand & supply curve, and before c2d, ddr2 wasn't really popular as p4 was the only platform for that.

nowdays, even amd is using dd2 (am2 platform), and c2d's huge popularity made huge demand not to mention the demands made by vista.

just because d-ram manufacturers can make ddr2 chips more efficient, that doesn't mean they have to lower the price. the increased efficiency might not be able to compensate the increased cost of smaller micron processing & demands.

even without the price fixing, price can be set by the major player through following the price leadership.

i think most d-ram manufacturers are about give up as their operational margins are pretty slim (many tried to move to nand flashmemory, but that's not good either now as toshiba is re-considering flashmemory business), it would be unwise to push them too much as there will be consolidations which effectively make less competition meaning higher price in future.

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