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`FEATURE
`More DRAM vendors involved in Justice Department probe
`
`🔎
` Go
`
`By Cara Garretson, IDG News Service
`IDG News Service | Jun 21, 2002 1:00 AM PT
`
`The antitrust probe launched by the U.S. Department of Justice (DOJ) into the dynamic RAM market appears to be larger
`than originally thought, as additional memory chip makers confirmed that the agency has contacted them as part of the
`investigation.
`
`The DOJ won't disclose the nature of the investigation, but attention has focused on volatile pricing changes in the
`memory market and the unison with which players adjust prices, raising questions about possible collusion. Although
`Micron Technology Inc., Samsung Electronics Co., Hynix Semiconductor Inc. and Infineon Technologies AG are fierce
`competitors, some believe the companies are illegally cooperating in order to salvage profits in what is a cutthroat
`business. Together, the companies hold approximately 75% of the DRAM market.
`
`A spokesman for the U.S. office of German DRAM maker Infineon confirmed yesterday that the company received a
`subpoena from the U.S. District Court for the Northern District of California and intends to cooperate fully with the
`investigation. Two Taiwanese companies, Nanya Technology Corp. and Winbond Electronics Corp., have also been served
`with subpoenas, according to news reports, as has Japanese manufacturer Elpida Memory Inc., a joint venture between
`NEC Corp. and Hitachi Ltd.
`
`These companies join Micron, in Boise, Idaho, and the U.S. division of Korean DRAM maker Hynix, which both confirmed
`they have been served with subpoenas (see story). Samsung, the world's largest memory chip maker, reportedly is also
`involved. Calls to its U.S. headquarters went unreturned.
`
`A spokeswoman for the DOJ confirmed this week that the antitrust division is conducting an industrywide investigation but
`declined to comment further.
`
`Industry participants have suspected collusion on memory chip pricing for some time. At an industry conference in April,
`Dell Computer Corp. Chairman and CEO Michael Dell noted that memory makers must be benefiting from a recent rise in
`prices. The companies supply DRAM to PC makers for use as main memory in desktop and notebook computers.
`
`"There was some cartel-like behavior by a number of DRAM suppliers," Dell said at the time. "There was an assumption by
`some of the companies that they could have both an incredible increase in the price of DRAM and [increased] demand at
`the same time. The world just doesn't work that way."
`
`DRAM pricing has a dramatic effect on PC vendors such as Dell, since main memory can make up 5% to 6% of a PC's total
`materials cost, said Jim Cantore, principal analyst for memory at market researcher iSuppli Corp. in San Jose.
`
`SponsoredPost Sponsored by Sprint
`7 Questions You Need to Stop Asking at Work
`
`"The major [PC vendors] really felt they were getting hit by a unified action; they thought DRAM suppliers were in collusion
`to set prices higher," Cantore said. "But from the [DRAM] industry standpoint, they went from losing a horrible amount of
`money last year to trying to make a little money in the first quarter."
`
`Polaris Innovations LTD Exhibit 2001
`Kingston v. Polaris, IPR2016-01622
`Page 2001-1
`
`
`Search for
` !
`FEATURE
`More DRAM vendors involved in Justice Department probe
`
`🔎
` Go
`
`By Cara Garretson, IDG News Service
`IDG News Service | Jun 21, 2002 1:00 AM PT
`
`The antitrust probe launched by the U.S. Department of Justice (DOJ) into the dynamic RAM market appears to be larger
`than originally thought, as additional memory chip makers confirmed that the agency has contacted them as part of the
`investigation.
`
`The DOJ won't disclose the nature of the investigation, but attention has focused on volatile pricing changes in the
`memory market and the unison with which players adjust prices, raising questions about possible collusion. Although
`Micron Technology Inc., Samsung Electronics Co., Hynix Semiconductor Inc. and Infineon Technologies AG are fierce
`competitors, some believe the companies are illegally cooperating in order to salvage profits in what is a cutthroat
`business. Together, the companies hold approximately 75% of the DRAM market.
`
`A spokesman for the U.S. office of German DRAM maker Infineon confirmed yesterday that the company received a
`subpoena from the U.S. District Court for the Northern District of California and intends to cooperate fully with the
`investigation. Two Taiwanese companies, Nanya Technology Corp. and Winbond Electronics Corp., have also been served
`with subpoenas, according to news reports, as has Japanese manufacturer Elpida Memory Inc., a joint venture between
`NEC Corp. and Hitachi Ltd.
`
`These companies join Micron, in Boise, Idaho, and the U.S. division of Korean DRAM maker Hynix, which both confirmed
`they have been served with subpoenas (see story). Samsung, the world's largest memory chip maker, reportedly is also
`involved. Calls to its U.S. headquarters went unreturned.
`
`A spokeswoman for the DOJ confirmed this week that the antitrust division is conducting an industrywide investigation but
`declined to comment further.
`
`Industry participants have suspected collusion on memory chip pricing for some time. At an industry conference in April,
`Dell Computer Corp. Chairman and CEO Michael Dell noted that memory makers must be benefiting from a recent rise in
`prices. The companies supply DRAM to PC makers for use as main memory in desktop and notebook computers.
`
`"There was some cartel-like behavior by a number of DRAM suppliers," Dell said at the time. "There was an assumption by
`some of the companies that they could have both an incredible increase in the price of DRAM and [increased] demand at
`the same time. The world just doesn't work that way."
`
`DRAM pricing has a dramatic effect on PC vendors such as Dell, since main memory can make up 5% to 6% of a PC's total
`materials cost, said Jim Cantore, principal analyst for memory at market researcher iSuppli Corp. in San Jose.
`
`SponsoredPost Sponsored by Sprint
`7 Questions You Need to Stop Asking at Work
`
`"The major [PC vendors] really felt they were getting hit by a unified action; they thought DRAM suppliers were in collusion
`to set prices higher," Cantore said. "But from the [DRAM] industry standpoint, they went from losing a horrible amount of
`money last year to trying to make a little money in the first quarter."
`
`Polaris Innovations LTD Exhibit 2001
`Kingston v. Polaris, IPR2016-01622
`Page 2001-1
`
`
`
`The dramatic fall in DRAM prices last year and their subsequent increase this year most likely set off the DOJ's investigation,
`Cantore said. Memory makers were trying to recover after selling DRAM significantly below cost, he said. "It's like passing
`out speeding tickets at the Indy 500 -- they were all breaking the speed limit."
`
`One observer noted that the DRAM industry has been subject to wild price swings for decades.
`
`"The synchronization of pricing trends is explainable; DRAM vendors find out from their customers what they are willing to
`pay," said Peter Glaskowsky, editor in chief of Microprocessor Report in San Jose. "But at the same time, it's entirely possible
`that some of these companies might have other channels to get [one another's] pricing information directly. It is a very
`competitive market, but cooperation, especially when they're trying to support higher prices, would benefit all of them."
`
`Ashlee Vance of the IDG News Service contributed to this report.
`
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`Polaris Innovations LTD Exhibit 2001
`Kingston v. Polaris, IPR2016-01622
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`
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`Copyright © 1994 - 2016 Computerworld, Inc. All rights reserved.
`
`Polaris Innovations LTD Exhibit 2001
`Kingston v. Polaris, IPR2016-01622
`Page 2001-3
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