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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.
Big deal, happens to everything. Sooner or later one of them breaks down with money issues and that bottom falls out or some upstart comes along and cleans house. With memory prices as low as they are right now this is like getting bent about a "price fixing" problem with paper clips. How about they figure out how to get gas down from 2.50 a pop...
Neck_of_the_Woods
#/usr/local/surf/glassy/overhead
Aww, so Infineon, Micron, Samsung and all the others fix DRAM prices eh ? well SCREW them bastards. Let's all boycott RAM, let's all run our entire systems in SWAP !! That'll teach them !
"A door is what a dog is perpetually on the wrong side of" - Ogden Nash
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.
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.
"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.
According to /me, a technology analyst, market consolidation and Windows upgrade cycles have contributed to subtle cooperation between the major DRAM "competitors" and Microsoft to keep demand high.
If there's been price-fixing, it certainly hasn't been very competently done. DRAM prices have been in the flusher for quite a while now, and the manufacturers are losing money at an amazing rate.
It's actually a stupid law. Anti-price fixing that is.
In fact, the most important commodity in America is readily purchased from a price-fixing cartel (aka OPEC).
Here's the howto on legalized price-fixing in America.
Monday... from the Wall Street Journal, "AT&T announces a 4.3% price increase in consumer long distance rates across the board."
Tuesday... from the NY Times, "MCI announces a 4.35% price increase in consumer long distance rates..."
(Result: A successful price fixing.)
Or it could go like this....
Monday... WSJ Reports "AT&T announces a 6% increase in consumer l.d. rates.
Tuesday... WSJ Report "MCI announces a 3% rate hike."
Wednesday... "WSJ Reports "AT&T announces a 50% decrease in a previously announces rate hike due to customer complaints..."
(Result: A successful price fixing in two stages.)
Shit happens man.
When a very limited number of companies control the whole world's market, things like this happen.
The user is helpless when they have so much control. Reached this point, competition is not enough and the market doesn't regulate itself at all. This is when free market means free for big corporations to abuse and screw the rest.
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.
The truth shall set you free!
I don't understand the problem. 1GB (2x512MB) of PC2700 DDR memory can be bought under $100.
DoJ should investigate OS or Office suite price fixing instead. These are horribly overpriced.
A) Memory is NOT a commodity at least by definition - nor is it a service. I DO think it should be listed on stock markets as such though. I think DRAM, a "combined finished product", would have to be rewritten as a raw material. I think if there were this type of regulation, rather than regulation on small arms of companies like Samsung, there would be more stabilization. Contrary to what the article makes it seem like though, I think RAM has been VERY reasonable, it has also been been a help to a partial turn around in PC sales over the past 2 years, by helping margins.
There are also a lot of companies producing RAM, at least more than enough for capatilist competition. I can name at least 6 seperate manufacturers off the top of my head. We don't see the same problem in industries where there is less competition. ( Samsung, Hyundai, Motorola, Kingston, Centon(Kbyte) PNY )
2)The area of concentration for price fixing shouldn't be DRAM it should be FlashRAM. As far as I can tell, this type of RAM is outselling DRAM at this point. (If someone could post a link to comparisons it would be appreciated) I haven't seen compareable Flash RAM decreases. The interesting thing about Flash RAM is that it appears to be cheaper to make and easier to sell. There are also LOTS of competition. Most people can't see through the gimmicky 30x 70x flash RAM, and most don't buy into the Kingston, Viking theory of better RAM. (Novices will not attribute their computer problems to bad RAM they got for $10 after rebate)
IF RAM were made a commodity you'd see it traded like crude oil. Venezuelan and British oil do better because of the refining process. The "clear gas" at Amoco really is better than than the gas from Texaco! The RAM from Kingston really is better than the RAM from KByte.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
Come one, RAM manufacturers are in deep trouble, and have been for many months if not years. RAM prices have fallen to their lowest point in history, much stronger even than CPU prices have tumbled.
How can anyone claim they "kept the prices high"?!
Or more interesting: Are they going to smoke it all alone or are they going to pass it around?
Well, I looked into 2Gig of DDR memory for a Dell 8500 laptop. The price is $3300. If you go to Microns crucial website it is $999/gig. This is about 99 cents per gig which is cheap compared to the 60% markup Dell wants on the stuff. So! poor Dell can't make a buck because memory isn't cheap enough. Sheesh! gimme a break Dell. You say it amounts to 5-6% of the PC cost which is $150 on a $3K laptop. Hmmm, maybe you need to redo the math. Micron is trying to make an honest buck while you are doing highway robbery! Now who has to get their quaterly earnings up, Micron is at $9 per share whilst' Dell is at $30 per share. Hmmm, something doesn't compute here. In fact with all the announced Intel price decreases and chip decreases I wonder why Dell doesn't reduce their laptop/workstation website price. Seems like Dell is the one doing price fixing to me since other competitors are very few -- down to about two left. This means that Dells prices will not come down but only go up!
I always found it suspicious that everytime RAM prices came down, the factory was on fire, blown away by tornado, or was hit by an earthquake. It was like they really had a bad case of Sim City.
I think it's a tad more accurate to say it worked AGAINST Iraq...
I remember back in the 1970's -- before this nasty price fixing -- when you could buy an Altair S-100 1K RAM card assembled and tested for only $139. So, if you needed 512MB of RAM, it would only have required 524,288 of those S-100 boards and the cost would have been a mere $72,876,032.00.
Now those bastards are gouging us with their price fixing. I just checked on Crucial's web site and 512MB (DDR PC2100) costs $65.99!
Sooner or later they will manage to fix prices, and you will be able to tell by consistant profits by memory manufacturers.
Remember the first lesson in business 101 is never be forced to compete. Read Warren Buffet's advice for stock picking: you want a business with a "franchise" that allows it to prevent competitors from eating their lunch, thats where the profits are.
Wumpus
i've always wondered why the major memory chip producers did not create an OPEC type consortium for DRAM. they would be able to control the price of ram chips and hopefully hold it at a level that would be cheap enough to ensure brisk sales, while ensuring that they would make enough profit to a) keep their workers employeed all of the time, b) keep their production lines running at a certain capacity, c) be able to invest in memory chip technology.
the DRAM constortium could raise the prices on memory chips to a point where consumers would find it too expensive to buy chips, but a) the smaller manufacturers could offer cheaper products b) like OPEFC the consortium does not want to alienate its consumers through higher prices.
on another note, "Regarding the latter "conspiracy", the three main culprits appear to be Samsung and Hynix, both of Korea; and Taiwan's Nanya." though these three companies are geographically more closely located than the other major companies, it does not necessarily mean that they would want to devise a plan to price fix. don't airlines in the U.S. price fix also?
Why did I lurk so long before registering for a Slashdot account? I could have had a Slashdot ID of less than 100000.
http://www.converge.com/eWebApp/jsp/pricetrends/Ca tegoryDescDetail.jsp
Take a look at the graphs on this page. The only segment of the market that appears to be climbing is the PC100 and PC133 products. This is common for products as they are phased out of production. I'd say the author picked a poor time to post this article. DRAM makers like Micron won't be able to survive if the current pricing continues.
It might be a little more fun to vilify a company like Rambus which is suing it's way to profitability, bending all consumers over with it's illegal obtained patent portfolio. (allegedly)
Dell Computer Corp. chairman Michael Dell has publicly voiced his displeasure at excessive consolidation in the DRAM business, which has 40 percent fewer players now than in the mid-1990s. And Dell has voted with his checkbook: In early June Dell Computer and Taiwan's Nanya signed a five-year agreement that calls on Nanya to supply up to $3 billion worth of DRAM modules to Dell.
Yeah, we really need to worry about those mem prices , because they are killer when buying a computer or gadget. Wrong. Get the real monopolist as in Microsoft. Put sanctions on this company and tell OEM(manufacturers) to drop all OS tie-ins and make people buy their software off shelves. Then we will see how much people love microsoft.