DRAM memory chip market, rising prices warn China

05/06/2018

 

Despite efforts to bolster domestic industry, China remains the largest importer of memory products and the recent rising prices triggered an investigation

 

After a strange increase in the prices of the components of the DRAM memories, China has launched an investigation into Samsung Electronics Co, SK Hynix and Micron Technology. In fact, these three semiconductor makers control the market for DRAM memory chips.

Since China is the largest importer of memory products and its interest is obvious. Beijing is probing price-fixing allegations as DRAM prices had risen sharply and, according to a source with knowledge of the matter, “The investigation has kicked off in earnest”.

The reasons for rising prices, however, can be many. DRAM chips, in fact, help devices perform multiple tasks, and in two years they have doubled.

 

China consume 20 per cent of the world’s DRAM and is investing heavily to build up its chip industry

 

Regarding the investigation, all three companies said officials from China’s State Administration for Market Regulation had visited their offices recently.

Stifel Nicolaus analyst Kevin Cassidy said: “China (is) trying to protect their PC and smartphone market from rising DRAM costs. Typically, China PC and smartphones sell at lower costs/margins than those in other countries”.

 

A Samsung spokesman said the company was cooperating with the Chinese authorities

 

Already last year the first doubts had arisen about the sudden increase in technological components. According to the Chinese state media, regulators approached South Korea’s Samsung over rising prices.

The two South Korean firms and their US rival now commanding 96 per cent of the market and DRAM industry has seen a flurry of deals. For this reason, the DRAM sector has been a frequent target of regulatory probes globally over price-fixing allegations.

 

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