Samsung, SK Hynix, Micron sued over alleged DRAM price fixing

Chipmakers are exploiting the demands of ultra-hungry AI data centers and restricting DRAM supply to inflate prices in the memory market, a lawsuit just filed in federal court in California claims.

South Korea just laid out a sweeping industrial strategy centered on semiconductors and AI, unveiling $576 billion in chip investment. The plan is anchored by Samsung and SK Hynix, the world’s two biggest memory chipmakers.

Borrowing a phrase from Mao Zedong, South Korea’s President Lee Jay Myung casts the initiative as a “great leap forward,” based on the “triple axis” of semiconductors, physical AI, and data centers.

Using the pivot as cover

Clearly, all eyes are on AI in South Korea. The booming tech is the future, Seoul seems to have decided.

But not everyone’s happy – just talk to gamers who are extremely worried about the so-called “RAMpocalypse,” the global memory shortage spurred on by the demands of AI data centers.

Now, Samsung, SK Hynix, and American semiconductor company Micron have been accused of illegally coordinating to restrict commodity DRAM supply and inflate prices. The firms hold around 90% of the global DRAM market.

In a class action lawsuit filed in the US District Court for the Northern District of California, 17 plaintiffs say that it’s the chipmakers’ fault that prices have risen roughly 700% over the past 4 years.

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The complaint revolves around a simple claim: that Samsung, SK Hynix, and Micron conspired to shift production toward high-bandwidth memory (HBM) chips essential to advanced AI processors.

On the surface, there’s nothing wrong with such a strategy change. But the plaintiffs – mostly individuals and small businesses – say the companies used the pivot as a pretext to wind down production of legacy formats, including DDR3 and DDR4.

The allegedly conspiratorial move has also allegedly made it extremely difficult for any rival to step into the market. A new DRAM fab costs tens of billions of dollars to build and takes years to complete.

The price is right?

The plaintiffs want the court to intervene and stop what they describe as a deliberate, industry-wide production squeeze. They’re also pursuing treble damages.

The complaint cites Apple’s recent iPad and Mac price increases as evidence of the squeeze. The company indeed claimed it could no longer absorb surging memory and storage chip costs.

It’s highly doubtful this particular lawsuit will be successful. That’s because there’s precedent: a similar complaint, filed against Samsung, SK Hynix, and Micron by law firm Hagens Berman, was dismissed in 2022.

Back then, the court ruled that the firms’ actions were “more likely explained by lawful, unchoreographed free-market behavior” than by an illicit agreement. In other words, there wasn’t enough actual evidence of a conspiracy.

Nikkei Asia reported in February that Samsung, SK Hynix, and Micron were separately investigating their customers to ensure no one was hoarding more memory than they needed, thereby exacerbating supply issues.

But the problem isn’t going away anytime soon. PC manufacturer Lenovo just said in Germany that we shouldn’t really expect a return to normalcy because significantly higher RAM prices are here to stay, even if production ramps up.

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