Memory chip makers raided by new Chinese antitrust regulator

4 June 2018 8:26am

1 June 2018. By MLex Staff with analysis by Eliot Gao and Yang Yue

China's State Administration for Market Regulation has carried out several surprise inspections at the offices of multinational memory chip makers, MLex has learned.

The raids come amid suspicions of anticompetitive conduct causing big price rises for dynamic random access memory, or DRAM, which is used in information technology products.

Jiwei Net, a local industry media outlet, named the companies involved as Samsung, SK Hynix and Micron Technology, and reported that antitrust enforcers had sent personnel yesterday to conduct on-site investigations at their Beijing, Shanghai and Shenzhen offices.

Responding to an enquiry from MLex, a representative at Samsung said they were not aware of any raids.

A representative of SK Hynix (China) Investment declined to comment.

Micron did not reply to a request by MLex for comment.

Samsung, SK Hynix and Micron are the world’s three biggest suppliers of memory chips, controlling more than 90 percent of the DRAM market.

Micron was last week said to have been summoned by Chinese antitrust authorities to a meeting, possibly because it was suspected of abusing its DRAM chip market dominance, resulting in price increases last year.

Since 2017, prices have risen steeply in the memory chip market, putting enormous pressure on Chinese downstream computer product manufacturers.

It is said that yesterday’s raid was prompted by complaints from downstream Chinese companies, and that the three tech giants were suspected of conduct that included bundling and excessive pricing.

In April, Samsung, SK Hynix and Micron faced a class-action price-fixing lawsuit following reports from late 2017 of a new antitrust investigation in China.

In that suit, the companies were the subject of price-fixing claims by several purchasers of phones and computers made by Samsung, Motorola, Apple and Lenovo.

The companies had “made a near simultaneous decision in 2016 to restrict growth in the supply of DRAM to stop the downward pressure on prices and, indeed, to cause DRAM prices to skyrocket upward,” the plaintiffs wrote in the lawsuit.

And that was not the first time the three companies had been scrutinized over their conduct in the DRAM market. Samsung and SK Hynix paid criminal fines of $300 million and $185 million, respectively, in an antitrust case in 2005. The three companies paid civil damages of close to $700 million.

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