Lawsuit alleges Samsung, SK Hynix, and Micron colluded to inflate DRAM prices

Major RAM manufacturers sued for manipulating prices and demand

The big story in computing these days is how an ongoing shortage of RAM (dubbed RAMageddon or the RAMpocalypse) has led to massive increases in hardware costs. The conventional explanation of the situation has been that shortages have been driven by the widespread construction of AI data centers. However, a new lawsuit (Garciaguirre et al. v. Samsung Electronics Co., Ltd., et al.) filed against RAM manufacturers Samsung, SK Hynix, and Micron, alleges that these companies are exploiting market conditions to artificially inflate prices. The class action lawsuit filed by 14 individuals and three businesses accuses Samsung, SK Hynix, and Micron of conspiring to fix prices and supply of DDR3 and DDR4 RAM, resulting in higher costs. “This lawsuit seeks to recover for—and stop—concerted anticompetitive behavior by three oligopolists in the market for dynamic random access memory, more commonly called DRAM,” the opening line of the suit reads. DRAM is essential for virtually every computing device, as it stores the bits used for short-term data. Samsung, SK Hynix, and Micron account for more than 90% of global DRAM revenue. The suit says that the firms have “fixed supply and prices for DRAM, engaging in conduct that makes no economic sense absent collusion and that has driven up the price of conventional DRAM (sometimes called commodity DRAM) approximately 700% in a four-year period.” As for the seemingly illogical behavior, the lawsuit explains that despite the soaring demand for DRAM, these three companies have cut production to focus instead on less-profitable High Bandwidth Memory (HBM), which is generally used in data centers. The decreased production of DRAM has led to massively marked-up prices for DRAM purchasers, driving up electronics prices. The lawsuit points out that between 1998 and 2002, these same three companies, Samsung, Hynix (the predecessor of SK Hynix), and Micron, took part in a criminal conspiracy to fix the prices of DRAM sold to major American computer companies. After the Department of Justice prosecuted the case, Samsung pleaded guilty and paid a $300 million fine, Hynix pleaded guilty and paid $185 million, and Micron avoided a fine by reporting the conspiracy and cooperating. As a result, several Samsung executives went to prison. The trio of companies was also investigated by the Chinese government during a RAM price spike between 2016 and 2018. As for what the lawsuit is seeking in damages, it requests that the court grant permanent injunctive relief to “remedy the ongoing effects of Defendants’ unlawful and anticompetitive conduct, including requiring Defendants to cease coordinated supply restriction and to restore competitive conditions in the conventional DRAM market.” The suit also seeks damages for the plaintiffs and previously defined classes (those affected by the alleged price fixing).

Console hardware manufacturers are feeling the squeeze from soaring RAM prices. Valve’s Steam Machine ended up several hundred dollars over its previously intended entry point, while Sony, Microsoft, and Nintendo have jacked up the prices of their consoles. It costs $300 more to buy an Xbox Series X than it did at launch, while a base PS5 now costs $150 more than on day one. Between soaring hardware costs and games like Grand Theft Auto 6 going for $80 to $100, these are tough times for gaming consumers.

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Lawsuit alleges Samsung, SK Hynix, and Micron colluded to inflate DRAM prices

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