DRAM Price Fixing

AEton writes "There's an interesting article up at Newsforge, an OSDN sibling site, about price fixing in the DRAM market. According to Melanie Hollands, a technology analyst, market consolidation and uncertain prices have contributed to subtle cooperation between the major DRAM "competitors" to keep prices high. While she finds little "hard evidence of collusion", there are strong circumstantial trends which last year sparked a secretive Department of Justice antitrust inquiry." Allegations of this have been floating around for a while - heck, you can even join the suit.

Comments

One word: Sumitomo

[BenJeremy]

Way back... a plastics manufacturer had the only plant currently set up to produce the epoxy resin used in most plast ICs.

RAM prices tripled overnight.

No other chips raised in price, and the epoxy, still priced around US$5-US$6 a pound, had a 6 month stockpile sitting at the site. All of the RAM manufacturers also had 6 month stockpiles of the stuff.

Plants in the US and Japan could have bene brought online in months, and Sumitomo had their plant back online within 6 months.

RAM sellers suck. I don't know where the exact problem is, but it's treated as a commodity, and it's wrong.

Re:One word: Sumitomo

[Quixote]

IIRC there was a fire at the Sumitomo plant. Just like the stock market (anyone remember the late 90s? I thought so), there's a lot of speculation that goes on in this market. When people heard of the fire, they started hoarding chips, anticipating a shortfall later; this lead to some appearance of shortage and hence higher prices; which led to more hoarding; which led to more shortage; and so on.

Dumb price fixing

[Anonymous Coward]

Considering the DRAM manufacturers are typically losing money on every chip they sell, this would have to be pretty bad collusion between the major players.

Whichever companies outlast the others and able to secure enough financing to pay for the next major technology node will be able to set whatever price they want - the profit margin is already so low (negative!) that no one will want to become a competitor.

IBM was pretty smart to get out of that business years ago.

you can even join the suit

[Anonymous Coward]

"While she finds little "hard evidence of collusion", there are strong circumstantial trends which last year sparked a secretive Department of Justice antitrust inquiry." Allegations of this have been floating around for a while - heck, you can even join the suit."

Hey, who needs evidence!! "It was HIM" That's all the evidence I need!

So lynch mobs are ok if they go for large companies? How peculiar!

Get some proof, or fuck off.

Maybe another reason

[Technician]

I know it looks funny, but think about the market dynamics. Most chip manufactures can change photomasks and either make DRAM, Flash RAM, Cell Phone chips, Network Chips, etc. The market has some fluctiuations. When the price is up, management shifts to produce what is profitable. When the market is down, they sell off inventory and tool for other chips. I know Intel closed a flash plant when flash prices fell. They started again when Cell Phones needed lots more memory driving the price back up. The market swings. The manufactures can't instantly deliver. It takes time to react to the market. Starting a new product line takes several months from new raw wafers to finished deliverable components. It's easy to flood the market if you don't know your compeditors are also trying to fill 100% of a shortage. A shortage of 500,000 units could quickly become a glut of 1,500,000 units as 3 manufactures come on line to supply the shortage. They all get stung with the rapid price drop while trying to recover the manufacturing costs. The margins are quite thin most of the time in the DRAM market. Bumps in demand do catch the suppliers off guard.

Re:Howto - Legalized Price Fixing

[Cyno]

Or look at the RIAA and MPAA.

Many media companies have formed into these happy associations that just happen to set the price of CDs or DVDs around $15.

We all know the costs in making and distributing a 5" plastic disc are less than $1 and songs that have been off the charts for a couple years won't produce a profit. But that doesn't stop them from "price fixing".

The problem is not the artists, the developers, the manufacturers. The problem is that capitalism is a broken system. Its a system designed to allow people to screw eachother over. Shit happens all the time, everywhere. The whole point of capitalism is to make as much money as you can, which means by the end of your life you might end up with a lot of money but everyone else would have had to slave away their whole lives while you screwed them over to provide you with your valuable possessions.

These things. These items we place so much economic value in. Are they really that important to our lives? So important that we would sell our kids into a lifetime of slavery just to prove our point that Capitalists are wealthy or that money doesn't grow on trees?

But money does grow on trees, like every other paper product we produce.