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Micron, Samsung, and Hynix DRAM Price Inflation Antitrust Class Action

Micron DRAM

When a handful of companies control 95% of a market, it is much easier to make anticompetitive arrangements. That has been the situation in the DRAM market, and the complaint for this class action claims that makers of DRAM components did in fact conspire to fix and inflate prices, causing price rises of, on average, more than 300% during the class period.

The class for this action is all persons and entities who bought DRAM in the US directly from one or more of the defendants in this case or their co-conspirators (or their controlled subsidiaries, affiliates, or joint ventures), between June 1, 2016 and February 1, 2018.

RAM is the “working memory” for computerized devices, permitting faster work with data than would be possible using a hard drive alone. DRAM is a type of RAM used in consumer and industrial electronics.

The companies that dominate the DRAM market and that are defendants in this case include Micron Technology, Inc., Micron Semiconductor Products, Inc. (together “Micron”), Samsung Electronics Co., Ltd., Samsung Semiconductor, Inc. (together “Samsung”), and SK Hynix, Inc., and SK Hynix America, Inc. (together “Hynix”).

The complaint points out that the DRAM industry is susceptible to price fixing:

  • Barriers to entry are high.
  • The market is very concentrated.
  • Demand is inelastic and depends on the demand for computerized devices.
  • Products are very similar to each other.
  • There are many opportunities to conspire, such as industry events and conferences.

The steep price increases for DRAM cannot be explained by market factors, the complaint says. The price of the raw silicon wafers from which DRAM units are made has remained relatively stable, as have research and development costs. The latest generation of DRAM devices was released in 2014.

This is not the first time that DRAM companies have engaged in anticompetitive behavior. In 2002, Micron, Samsung, Hynix, Infineon Technologies AG and Elpida Memory, Inc. pleaded guilty to price fixing in a Department of Justice investigation. Individuals involved with the companies have pleaded guilty since then as well. The European Commission and Canadian authorities have also investigated and prosecuted some of the defendants. A civil lawsuit was settled for hundreds of millions of dollars.

The complaint claims that the defendants used a system of public statements to communicate with and monitor each other. They also used these statements “to commit to collective supply discipline, despite increased demand,” as the complaint puts it. The complaint provides examples of these public statements and the other companies’ responses, for example, allowing Micron to signal to Samsung and Hynix to cut down on supply while assuring them it would not take their market share.

The Chinese government started an investigation into price fixing between the defendants in this case in 2017. Bloomberg has reported that on May 31, 2018, Chinese antitrust investigators raided Micron, Samsung, and Hynix offices.

The complaint claims that the companies have violated the Sherman Antitrust Act.

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