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DRAM Makers Accused of Price Fixing
AdamWeeden writes "According to the EETimes, many of the states in the U.S. have entered into a class-action lawsuit against a group of eight DRAM manufacturers. The companies are accused of price-fixing computer memory for over five years, beginning in the late 1990s." From the article: "Four companies and 12 executives have so far pleaded guilty to participating in the conspiracy and have been assessed more than $730 million in fines. In May, three of the four companies, Samsung Electronics, Hynix Semiconductor Inc. and Infineon Technologies AG agreed to pay a total of $160 million to settle class action suits related to price fixing. Elpida Memory Inc., the fourth company to plead guilty, is still involved in the class-action suits."
Blasted DRM makers.... oh, wait a minute.....
Instead of fining these companies, they should force them to provide double the amount of memory for the same price for say 90 days, e.g. 256mb chip for the same price as 128mb chip: that way the consumer benefits instead of the government.
Always good to see lawyers making more money off class actions suits, and the rest of us getting a rebate.
They price fixed for 5 years ... starting in the 1990s...
I wonder if the summary author knows that it's 2006.
Why why why why why when these companies do crap like this don't we just abolish thier corporate charter, sell their assets to their competitors and realse their patents and copyrights into the public domain and abolish their trademarks? I'm getting very tired of hearing about large corporation X acting against the public intrest by breaking the law. Make it so that shareholders will punish them for breaking the law and a corporation will not break the law.
So they fixed prices, so what, memory prices in the mid/late nineties plummited. Early 90s buying a 4 meg chip costed hundreds, mid 90s a 32 meg chip cost under a hundred, by the end of the 90s we were paying under a buck a meg, heck now it's what, under a buck for 10 megs?
In the end, the consumers will see none of it (who's really going to go through to paper work for a $3 rebate?), the lawyers will see millions, and the government will get the unclaimed payouts.
IOW, a complete waste of time.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
This is evidence of the deep reliance we have on computers. Yeah, I know there aren't too many people who would argue that we don't rely on computers heavily in today's world, but 8 companies and 34 states... Whew! A lot of risk (for conspirators) and a lot of ?anger? (for the victims). I don't think any doubt remains that memory chips are a commodity vital to our society.
Does this mean I will be getting some of my money back from Crucial on the $1,000+ dollars I spent on a gigabyte of RAM back in 2002?
"I bow to no man" - Riddick
If the DRAM market is corrupt, I'll just switch to something else: Rambus! Oh wait...
Colin Dean Go a year without DRM
730.000.000$ / 200$ = 3.650.000Gb = Free RAM to everyone.
Yahooooo !!!
PROSECUTOR: Did your company engage in price fixing?
DRAM MEMORY: Maybe, maybe not... I just woke up, so I can't remember anything before that.
FLASH RAM: He did! He did! I'm sure of it.
BUBBLE MEMORY: We never had this nonsense in my day, I tellya what. *cough cough*
PUNCH CARD: You're tellin' me. *wheeze*
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Of course, none of this means that the consumers get anything -- even if damages are awarded, you'd have to be able to prove that you purchased DRAM between 1999 and 2002. Hope you kept those receipts, folks.
Okay, now that the lawyers have been paid, where do I pick up my share - a 10% discount coupon on future DRAM purchases?
He who knows best knows how little he knows. - Thomas Jefferson
Assume the plant, the research and development has been paid for and the obvious thing must be stated...
How is this a remotely valid assumption, given that RAM chips have seen orders of magnitude increases in speed and capacity?
If you don't know where you are going, you will wind up somewhere else.
I'll even give you more credit: You're OK with letting Price Fixing slide, which affected prices throughout the entire industry (from OEM machines to individual retail sticks and everything DRAM-related inbetween), if the consumer doesn't reap the biggest benefit from legal action taken against the corporations?
First of all, IANAL, but I'd think both the letter of the law and the spirit of the law should matter to some people. You set a *huge* double standard if you only go after companies that succeeded in their plot as opposed to those who ultimately slowed their decline. The law should apply to everyone and every corporation equally, and although it doesn't seem to do so, we should applaud efforts like these which make a statement that it does.
In addition, this is still YOUR government, whether you approve of its spending habits or not, and the lawyers undoubtedly earned their fair share by proving the states' case against the companies. And whether you like it or not, the government came out ahead here of corporations that thumbed their noses at YOU.
Whether it was a little $ or a lot of $$$, you were a victim if you bought a computer, a stick of ram, or anything related to DRAM during that five year period. Judging by that whole dot-com boom and Internet thing, I'd be willing to bet that a whole lot of DRAM-using OEM computers were sold, and a whole-lot of techies were buying DRAM as it became cheaper and more attractive. So in this case, if nothing else, your government stood up for you and its people, stood up for the law, and stood up for itself. It tried to send a message.
While consumers may never see a dime come directly from this case, the money will go to the state coffers, and the money will ultimately benefit society, even if your opinion of the government is of the lowest and most ineffecient kind.
Some good *was* done. The difficulty that you and others have with trusting in this simple thought is that you will never know exactly how it was done. You just have to understand, trust, and hope that this was the case. That, at this point in time, is how our system works.
1993 - 4 MB SIMM $160
2003 - 256 MB DIMM $160
Spitzer should go after real criminals, and stop using threats and publicity to extort big settlements.
I misread the subject as "DRM Makers Accused of Price Fixing" and got all excited!
I couldn't agree more!
If anything this law suit may make prices go up due to the damn legal fees!
This way you are actually helping them by creating a gold rush which will clear their stock inventory in the next 90 days and they can even write it off as a loss as well.
A penalty is supposed to hurt the penalised, not the improve its financial and inventory positions.
Huh! If this is going to be good for them, then why don't they do it themselves?
Is anybody going to stop them?
Yeah, me too. Slap these fixers hard.
Here is one area that is very difficult to win the anarcho-capitalist debate on -- the cartelization of this particular market in this particular industry sounds very insidious and hard to compete with without the government intervening and bringing the hammer down.
Most people believe that memory manufacturing is a VERY expensive business. This is true in terms of overall numbers (billions), but it is false in terms of actual products required on the market. Memory is used in much more than just computers (cars, microwaves, cell phones, digital cameras, DVD players, etc), and it is a huge market, possibly a trillion dollar one coming soon. When you have a big market, a big demand and a low supply of manufacturers, it doesn't take much to raise the billions needed to enter a market where there is obvious collusion. 1 million Americans risking US$3000 in a market that you can prove is selling at a overwhelming profit is not a big risk -- and many people were aware of the over-priced memory market back in the 90s.
Yet I think the debate is won by the free marketeers when you realize that one of the biggest reasons for the cartelization in this case is patent and copyright law. Memory chips are heavily burdened by patents, and many of those patents are cross licensed by those in the cartel. This smacks of government-paternalism and is one reason why patents generally help the cartels and the State rather than the inventor. The cartel:inventor ratio in terms of who is helped by patents is very very high (more cartels are helped than individual inventors).
I believe the government is wrong for starting class-action lawsuits. We all know that few companies are hurt by class-action lawsuits, and even fewer "victims" are helped. The lawyers (who are the biggest supporters of the expanding State) win the most! Why don't we roll back before the cartel-State collusion and see what the real cause of this problem is? The biggest barrier to the market is NOT money -- stop thinking that! No matter what the financial cost is, if there is a profit to be made, people will invest. I don't care if it is quadrillions that are needed, as long as it is profitable (and cartels can always be beaten in price), people will risk money. The real barrier is the State -- no one can raise enough "force" to overcome the force of government patents and copyrights.
Why when any two or more companies in the world get together and settle on a price for their product do we come down on them like a ton of bricks for price-fixing, yet when OPEC gets together and "FIXES" a price for oil we just bend over and take it up the tailpipe? Anyone besides me ever think about how hypocritical that is? Price fixing is bad, but why do we allow it for oil?
Not this again....They've been through this once already and Micron ratted on all of the participants for ammunity...Haven't they learned their frickin' lesson!?
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Don't forget the capital investment involved in the manufacturing line itself.
The costs of any given chip are probably something like this:
1% raw materials, 15% operating costs (electrical, labor, etc), 20% R&D, 74% paying back your capital costs before your plant becomes obsolete.
retrorocket.o not found, launch anyway?
When I bought my last computer in 1999, I paid something north of $300 for 128M of RAM. Anymore you can buy an entire system for that. Mind you there was a shortage of RAM due to a big quake in Taiwan or at least thats what we were told at the time. And that purchase wasn't in East Podunk, Iowa either, it was smack dab in the middle of Silicon Valley. Any way to involve Rambutt er... Rambus in this?
This is not going to help anyone get cheaper memory. Everyone will be paying more for memory now so they can "reclaim court costs" as vonage is currently charging me .99 a month for.
MISSING - Sig file. 2 years old black and white and very funny. If found please email me.
I mean, I say zero, but to all intents and purposes it may as well be so, it's a such small fraction of a penny that it's not worth remarking on the value of the physical item. Assume the plant, the research and development has been paid for and the obvious thing must be stated...
So, let me paraphrase...ignoring the majority of costs, producing RAM costs almost nothing? Bzzt, you lose, thanks for playing.
And the l33t shall inherit the 34r7h.
Companies hurt the consumer, via price fixing, or stock manipulation (Enron, WorldCom), yet its the government that recieves the fines, those screwed are left holding the bag...
Thanks to file sharing, I purchase more CDs
Thanks to the RIAA, I buy them used...
There is some interesting backstory to this whole deal.
In the late 90's an SDRAM standard was finally achieved for a chain of years. Previously to this the ram configurations were changing every single year.
On top of this the y2k craze had companies replacing PC's at a wildly accelerated rate causing SDRAM sales to go through the roof.
So many of these companies were making an absolute killing because they were using similar technologies for an extended period of time and everything they could make would get sold, so they all went into pure fabrication mode.
After y2k pc and dram sales tanked. Many of these manufacturers were producing WAY over market capacity and had the choice of
A) closing fabs (tossing billion dollar investments)
B) selling memory at market price which for some facilities was less than manufacturing cost.
C) refusing to sell at market cost.
It is easy to say 'blah blah evil' but closing fabs and axing multiple thousands of jobs and losing billion dollar investments which slaughters your shareholders is not exactly a great option either.
Two sides to every story ofcourse. Micron though plays this as though they are little angels. The reason they are mad is that Korean and German companies would not fix at a point high enough for them to maintain profitability, so they ran to the US government instead.
Maybe because American laws against price fixing wouldn't apply to an internation organization of which the US isn't even a member?
What do you think that we can do? We're a large consumer of oil, so we can apply economic pressue. That already happens though, and we already get very good deals. Believe me, gas is much less expensive in the US than in just about any other country.
Warning: Opinions known to be heavily biased.
"Boise, Idaho-based Micron Technology Inc. was granted immunity from criminal charges in the DOJ case in exchange for its cooperation."
Micron "complied" i.e. rat'd everyone out, now they have "immunity"...
DRAM prices are cheap, this will only inflate prices. The computer makers skimp on the memory to keep their share holders happy, what would you expect when you can get a computer for ~ $300... Apple will void your warranty if you add memory, the other OEM's charge outrageous prices for memory upgrades, from what I've seen of DELL's memory upgrades, they appear to be overpriced units made by MICRON...
*blink*
You realize you're also paying the salaries of the employees who have to design and implement the chips, the cost of machinery to fab them, the cost of labor to operate the fabbers, packaging, shipping, R&D, etc.
Yes, they price fixed. That doesn't mean it costs nothing to make RAM. Saying that just shows ignorance.
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+1 Insightful. Agreed. If you sue the companies for hundreds of millions of dollars they need to recap that money somehow. That'll just result in slightly higher costs until they've recovered from their injuries then they can be sued again!!
Gas on the other hand, that affects a greater portion of the US Market on a daily basis. I'd rather lose $5 on that one time investment in memory than be continually robbed for a products that requires more frequent purchases like music and gas.
Apple will void your warranty if you add memory
That is an absolute lie. Installing memory doesn't void anything. It doesn't now, and it never has. I have installed memory in every Mac I have owned since 1985, and Apple has service all of them without complaint.
Memory you install yourself is not covered under warrantee, and Apple will not install memory you didn't buy from them. If you install bad memory and it fries your motherboard, you're shit out of luck. But you can't fault Apple for not taking responsibility for RAM when they can't exercise any quality control over it.
Take a look at England. They pay 6-7 pounds per gallon on gasoline. This, primarily, is because they have fewer subsidies on gasoline production.
The US has enough subsidization to depress the price of gas well below the 15-16 $ it would cost without.
Yeah. $15-$16. Think about that next time you bitch about $3 at the pump.
Meanwhile, converting your car to burn ethanol requires you to bore out exactly three easily replaced components, and fuel grade ethanol is currently $3 and change per gallon - though not as easily found. With the same subsidies as gasoline (of course, transferred FROM gasoline), we could have the good old days of running your car 30 miles on $0.75 worth of gas.
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What I would do to own a time machine. I would buy as many Gb of RAM at $100 a Gb and go back 10 years and sell for $100 a Mb...instant 1024 (minus 1) times increase in investment...$100 becomes $102400...millionaire on 10Gb...Not bad...
When all is said and done, nothing changes...
Triple the cost but no real added benefit.
It is true that all of these memory manufacturers are going to pass the cost of this to the consumer. But you won't see that cost directly, because only the telecom industry is allowed to misrepresent their prices so blatantly. Say you walk into Best Buy and see a stick of memory that costs $100. If they actually charged you $130 by including a dozen different taxes and surcharges then you could sue them for false advertising. Yet our telecommunications industry gets away with this behavior. It steams me every month when I pay $21 for a phone service that lists for $11.
Anyway, the end result was I received a card in the mail which could be used in the store to compensate me for the exessive interest and, in return, Sears was allowed to continue gouging me (and everyone else) forever without further penalty. The only problems with this were:
I read later that the filers of the suit cried foul over the strings attached to the credit but the judge said it was settled and that was that. Call me cynical, but I'll be surprised if this case ends up much different.
Why do I think it's not a real case? Because at the same time this was supposedly going on, Micron also accused Hynix 9the most famous, but several other too) of accepting government (Korean) bailouts because they nearly went bankrupt from the free fall of the dropping prices. Micron was arguing in the past that during the same period Hynix was illegally LOWERING the price of chips. That case is already been decided in court.
You can't have it both ways. More of what happened is the big OEM ram USERS pushed for lower and lower prices tying up inventories. The companies may have agreed to slow down production to stop the prices from falling, but that's a really tough thing to argue that they should HAVE to make a product they're loosing money on. The psychotic up and down prices are the fault of middle-men trying to game the system... the manufacturer wouldn't have made ANY money off those chips. Now they could use the inflated prices to negotiate a higher cost to the OEMS, but the OEMS are smart and get prices far lower than the street price anyway.
The other fact people seem to miss is that many of these companies are one of only 1 or 2 manufacturers in a nation. It really is a matter of national security (not USA, but the individual nations) to keep those companies in business at all costs. This is capitalism working how it should... but of course the DRAM market isn't a "true" marketplace anyway. It takes Billions (yes with a B) to open a new fab and research new technology. The list in the lawsuit is literally every maker out there! I suppose they could let somebody go bankrupt... that's the "capitalist way" then prices would go up and stay up. but let's be reasonable.
DRAM prices used be as predictible as MicroSoft stock: the price halved (doubled) every two years. Even faster during a price war. But its been stuck at $100 (+/- $50) a gigabyte for about five years. This compared to flash which has fallen to $20 / GB from $300 in the same time period.
...I remember hearing that pathetic excuse at the local computer shops everytime memory prices went up, the only computer part that seemed to fluctuate in price instead of drop like a rock.
Havent we seen this a few times in the past? " Oh, bad industry.. you are fixing prices.. *slap on wrist* .. now be good.. " then we go thru it again in a few years as nothing ever changes. Governmental 'fines' are considered a cost of doing business anymore, and have long since stopped being a deterrent.
---- Booth was a patriot ----
Moderation -1
100% Troll
TrollMods think that if a bundle of truth mentions the catastrophic effects of the Iraq War, it must be stopped.
The truth, that is. They want the war never to stop. Of course neither will, though at least the Iraq War has that possiblilty.
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1) Wrong spelling
2) Maybe he was posting from Calgary
...However, I'd be willing to forgive their grave offenses if two 1024MB PC4200 DDR2 533MHz SDRAM sticks showed up in my mailbox tomorrow...
Please?
memory market actually has companies competing .I remember 98-2002 was very rough for memory manufacturers . They were sustaining huge loses and some memory manufacturers were forced to leave the market .As a consumer I cant complain in this case -they needed to do that for survival .Alternatively we would have left with monopoly or duopoly - other manufacturers would go bankrupt.
,cough,cough M$ .M$ got slap on the wrist and intel got nothing ( for 8 years intel were not allowing AMD to get any significant market share ,even though technically AMD processors were superior to intel all that time , now when conroe is out watch Intel crush AMD )
On the other hand look at intel or