The antitrust probe launched by the US Department of Justice (DoJ)
into the DRAM (dynamic RAM) market appears to be larger than
originally suspected, with additional memory chip makers confirming
that the agency has contacted them as part of the
investigation.
The DoJ will not disclose the nature of the investigation, but
observers speculate that volatile pricing changes in the memory
market and the unison with which players adjust prices has raised
the question of collusion. Although companies such as Micron
Technology, Samsung Electronics, Hynix Semiconductor and Infineon
Technologies are fierce competitors, some believe the companies are
illegally cooperating in order to salvage profits in this
cut-throat business. Together, the companies hold approximately 75%
of the DRAM market.
A spokesman for the US office of German DRAM maker Infineon
confirmed that the company received a subpoena from the US District
Court for the Northern District of California and intends to
cooperate fully with the investigation. A pair of Taiwanese
companies, Nanya Technology and Winbond Electronics, have also been
served with subpoenas, according to news reports, as well as
Japanese manufacturer Elpida Memory, a joint venture between NEC
and Hitachi.
These companies join Micron and the US division of Korean DRAM
maker Hynix, which both confirmed they have been served with
subpoenas. Samsung, the world's largest memory chip maker, is also
reportedly involved.
A spokeswoman at the DoJ confirmed that the antitrust division is
conducting an industrywide investigation, but declined to comment
further.
Speculation is mounting that the DoJ is looking into collusion on
memory chip pricing, which industry participants have suspected for
some time. At an industry conference in April, Dell Computer's
chairman and chief executive, Michael Dell, commented that memory
makers must be benefiting from the recent rise in prices. These
companies supply DRAM to PC makers for use as main memory in
desktop and notebook computers.
"There was some cartel-like behaviour by a number of DRAM
suppliers," Dell said at the conference. "There was an assumption
by some of the companies that they could have both an incredible
increase in the price of DRAM and [increased] demand at the same
time. The world just doesn't work that way."
DRAM pricing has a dramatic effect on PC vendors such as Dell,
since main memory can make up 5% to 6% of a PC's total materials
cost, Jim Cantore, principal analyst for memory with market
researcher iSuppli, said.
"The major [PC vendors] really felt they were getting hit by a
unified action; they thought DRAM suppliers were in collusion to
set prices higher," Cantore said. "But from the [DRAM] industry
standpoint, they went from losing a horrible amount of money last
year to trying to make a little money in the first quarter."
Tthe dramatic fall in DRAM prices last year, followed by a hike
this year, probably prompted the DoJ's investigation, Cantore said.
Memory makers were trying to recover after selling DRAM
significantly below cost, he said. One observer noted that the DRAM
industry has been subject to wild price swings for decades.
"The synchronisation of pricing trends is explainable; DRAM vendors
find out from their customers what they are willing to pay," said
Peter Glaskowsky, editor in chief of
Microprocessor Report.
"But at the same time, it's entirely possible that some of these
companies might have other channels to get [each other's] pricing
information directly. It is a very competitive market, but
cooperation, especially when they're trying to support higher
prices, would benefit all of them."