The Chinese government has opened a formal investigation into the pricing strategies of Micron, Samsung, and SK Hynix, after conducting significant investigations into the alleged price-fixing carried out by those firms for the past several years. This is apparently the culmination of at least several months of work, and doesn’t appear to be linked to any larger trade issues being discussed between the United States and China or between China and other nations. Of course, it’s impossible to claim that international trade issues have no impact on how events evolve, but China has been investigating allegations of DRAM price fixing since at least last fall, and lawsuits in the United States have recently been filed on the topic as well. Clearly, Chinese regulators aren’t the only ones whose radar dishes are locked on the last of the Dramurai. Three firms — Samsung, SK Hynix, and Micron — collectively control 96 percent of the DRAM market, with Samsung holding roughly 45 percent, Hynix 28 percent, and Micron 23 percent.
Chinese regulators met with Micron recently, due to the exposure of Chinese tech companies to variations in DRAM and NAND pricing. According to Trendforce, China is now the largest importer of DRAM and NAND in the world, accounting for 20 percent of the former and 25 percent of the latter. The government is aggressively funding the construction of DRAM and NAND foundries within China to and is scaling up production capabilities at SMIC (Semiconductor Manufacturing International Corporation), a semiconductor foundry with a mixture of 200mm and 300mm facilities and 28nm production lines. It takes time, however, to bring cutting-edge foundry capabilities fully online — it’s not unusual for a company to need 4-5 years between breaking ground on a new facility and ramping it up to full production. China’s ability to challenge existing DRAM and NAND pricing structures simply by making additional manufacturing capacity available is therefore somewhat limited.
It also hasn’t escaped regulatory notice that operating margins for the DRAM manufacturers are sitting at 69 percent (Samsung), 61 percent (SK Hynix), and 57.5 percent (Micron), levels Trendforce notes represent “the highest record in history.” Meanwhile, as this data from PC Part Picker shows, the overall price for DDR4-3200 has scarcely budged in months.
The DRAM companies have offered relatively weak defenses for their collective actions in the past, arguing that the spike is due to demand for mobile DRAM without explaining why they neglected to increase capacity planning to account for the increased DRAM requirements, or why memory capital investments in 2018 are expected to be at or near a historic low point for the industry at a time when the DRAM manufacturers themselves are making such bank. As we’ve previously noted in our coverage of the initial lawsuit, Samsung, Micron, and SK Hynix have all publicly said that they wouldn’t attempt to take market share from each other, which is more-or-less the opposite of what you’d expect firms in a healthy market economy to say. And while this case may have implications for China’s overall effort to position itself as a major leader in the foundry business and to grow its own semiconductor manufacturing, attempts to link it to more recent items in the news, like the treatment of ZTE, are less certain. DRAM prices have been high for the past 18 months, China has been examining the situation for quite some time, and it’s not the only group to look at the current status quo and find it rather suspicious.
Apple Investigating iPhone X Phones That Can’t Make Calls
Apple's iPhone X is once again having problems — this time with a great many dropped calls. Apple is investigating.
Verizon Will Fix Broadband Networks, Landlines to Resolve Investigation
Verizon has come to an agreement to fix thousands of telephone poles, build out new fiber optic lines, and settle its differences with New York City.
Abu Dhabi Reportedly Investigating Selling Its Share of GlobalFoundries
There are rumors that Abu Dhabi may be tired of pumping money into the GlobalFoundries venture. The foundry may be being prepped for sale.
Another Tesla Crash, Another Investigation Into Autopilot
So far this year, Teslas have clobbered a fire truck (fire truck won) and now a Connecticut police car. Autopilot also helped an actress create an in-car adult video.