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If the major DRAM manufacturers fixed prices from 1998 to 2002, they're about to pay for it

A saga that has been cumulating for the last eight years is about to take another major step.  Seven of the major eight DRAM manufacturers will face a major antitrust complaint filing tomorrow lead by Attorney General Bill Lockyer.  Lockyer's filing for the State of California will be followed by additional suits in thirty-three more states shortly after.

The complaint claims that between 1998 and 2002 seven manufactures colluded to "fix DRAM chip prices, artificially restrain supply, allocate among themselves the production of DRAM chips and markets for the chips, and rig bids for DRAM chip contracts."  When the complaints are filed tomorrow, July 14, the following companies will be named:

  • 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)

Interestingly enough, the world's largest DRAM manufacturer, Samsung, is not listed in the claim.  Samsung had a DRAM market share of roughly 30% at the time and has been found guilty of price fixing during that same period.  In March of 2004, the FTC dropped an antitrust case against Rambus, to which Rambus turned around and sued Infineon, Hynix and Micron for artificially decreasing the price of DRAM to hurt the proliferation of RDRAM. Samsung, Rambus' major producer of RDRAM at the time, was also absent from these accusations.

The alleged collusion hurt the bottom line of several PC manufacturers at the time.  The suit to be filed by Lockyer names several manufactures, including Apple, Compaq, Dell, Gateway and IBM.

An excerpt from one of the claims reads "The manufacturers did not limit this pricing coordination to isolated or occasional conversations. On the contrary, during a roughly four-year period, there were frequent pricing communications among the conspiring manufacturers, exchanges that intensified in the days immediately preceding the dates on which they submitted bids to supply DRAM to the (computer makers), their largest and most important customers."

The industry certainly hasn't been without its share of shakeups.  In March of 2006, four Hynix executives were found guilty of price fixing, and are currently serving jail time.  Three Samsung executives were also found guilty, and Elpida was fined for price fixing too.

The suits seek retribution for the three year price fixing period, and will also impose penalties if the defendants are found guilty.



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This article is over a month old, voting and posting comments is disabled

By masher2 (blog) on 7/16/2006 5:28:54 PM , Rating: 3
> "This is not a theory. There was a conspiracy. The conspirators themselves have admitted to it. "

Please try to form a coherent statement. The "admitted conspiracy" and the actions for which the USDOJ are bringing suit are related to collusion to RAISE the price of DRAM. Rambus is alleging they did the exact opposite-- charged too little for DRAM.

> "But the price was kept EIGHT TIMES higher..."

Lol, you obviously never purchased any RDRAMs. During their heydey, they were a bit less than twice as much as DDR ram...plus they had higher latency and higher heat output. Even by the time they were killed off entirely by Intel's design decisions, RDRAMs were less than triple the cost of equivalent-speed DDR. A far cry from "8 times" as high.

The licensing fees were 2%. The manufacturing costs were far higher, due to the needed inclusion of a memory controller on each chip. And the latency meant RDRAMs underperformed DDR in many situations.

As I said, its no mystery why Rambus failed. The technology was too expensive for its advantages. Worse, the perceived advantage of RDRAMs were less than zero. Most people (mistakenly) thought they were worse than DDR Ram in all cases....and I spent many a post back in the 2000 era trying to convince people otherwise.

In the minds of buyers, RDRAMs were wholly inferior. And that, coupled with Rambus's unpopular business tactics, ensured that RDRAMs remained a fringe market. Meanwhile, people brought DDR in droves...and the price kept going down, down, down.

Finally, the most telling argument against your conspiracy theory is simple common sense. If RDRAMs were so cheap to license and so easy to make-- why would anyone have a desire to "kill them off"? If this was true, chipmakers would have no incentive whatsoever to push people towards DDR...why would they even care?


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