2019 will see DRAM oversupply say industry sources

[HEXUS]

Production ramps by existing players, and new Chinese entrants, will be the reason.

Read more.

[Biscuit]

Good. We need some bloody competition to end this price fixing non-sense.

[Percy1983]

Happy days been wanting to upgrade my system for 18 months now, luckily Ryzen chips keep getting better while I wait.

[CAT-THE-FIFTH]

I remember saying a while back the new Chinese companies entering the market would have an effect and its good to see this is happening.

China is also investing in indigenous manufacturing and indigenous CPU designs - IIRC,the tech fund is over $100 billion in size.

[MrJim]

Profits from DRAM look set to slim considerably by the end of the year. The DigiTimes report says that DRAM makers are really enjoying fat margins right now. Micron has margins as high as 50 per cent in 2018, compared to 20 per cent at the end of 2016, for example.

Well, that's how cartels operate

[Fury559]

GOD BLESS CHINA NUMBA 1! In all seriousness I do like China, they release cheap smartphones with Snapdragon 845, they've released so much stuff that rivals western products for not even half the price.

[Iota]

Wasn't China investigating the ram companies yet again for yet again price fixing?

Hopefully with some competition we'll see sensible pricing.

[aidanjt]

Yup, and there's a lawsuit in the US with the same allegations. Haven't heard much about US or EU regulators getting involved, though.

[mercyground]

China is using pricefixing as a raid policy. There are already 2 lawsuits over theft of IP and chinese companies trying to jump the gun and use other companies IP to setup and profit from the market. Just the usual steal and copy crap.

"Seemingly a lot of the ill-feeling from China towards Micron seemingly stems from the memory company suing Taiwanese manufacturer UMC and its mainland China memory partner, Fujian Jin Hua, for illicitly copying Micron trade secrets. In December 2017 it called the case “one of the boldest schemes of commercial espionage in recent times.”"

https://www.theregister.co.uk/2018/0...anese_tech_co/

[Iota]

Either way if the main manufacturers lose market share in China itself, which is probably a large market to start losing in, then that'll see a drop in pricing due to oversupply elsewhere.

[DanceswithUnix]

I remember saying a while back the new Chinese companies entering the market would have an effect and its good to see this is happening.

They force a price drop, until a company or two are forced out of the market, and then the price goes up again. It has been going in cycles like that for as long as there has been dram, which is why Intel who were originally a dram company got out of the game. If the profits were that good, they would re-enter the market.

I find it hard to judge the dram companies for following the usual supply and demand rules when demand is outstripping supply.

[CAT-THE-FIFTH]

They force a price drop, until a company or two are forced out of the market, and then the price goes up again. It has been going in cycles like that for as long as there has been dram, which is why Intel who were originally a dram company got out of the game. If the profits were that good, they would re-enter the market.

I find it hard to judge the dram companies for following the usual supply and demand rules when demand is outstripping supply.

Meh,I judge them for the fact they ripped me off years ago by price fixing and they can go and take their shoddy practices and shove it. It wasn't a small amount of money - wish I had waited another three to six months. Once bitten,twice shy.

They care so little about their customers,that if they had even increased prices by 50%,the market might have bourne it TBH,but when prices double or triple,then its LOLWTFBBQ. Even Apple wouldn't get away with that!

The DRAM industry is full of idiots on the business side - they cannot even price fix in a non-stupid way. They do it so blatantly,it means governments get involved and they they get fined more than what they made from jacking up the price.

They deserve a special life achievement Darwin award.

Its also not like people are on average having doubled or triple increases on their salary or pension each year,so TBH I suspect most people don't really feel any sympathy.

If they were creating UK jobs,then perhaps I might be OK with the increases. Since they are not,all that extra money is enriching some other country. Great for them.

Plenty of industries have issues - imagine if all the food costs tripled within a year due to reasons,then it won't be people moaning,there would be revolution happening.

Imagine if the government said we needed to tackle the deficit and started putting a 200% tax on cars,and that means a £10000 car cost £30000(some countries have this),100% tax on TVs(some countries do this on TVs above a certain size) or that £500 phone has a "luxury" tax and now is £1500.

In the RL people would get well pissed off - even when Marmite went up a few percent look at how much moaning there was.

We as computer enthusiasts tend to be way more flexible with price increases than most of the general public.

[DanceswithUnix]

Meh,I judge them for the fact they ripped me off years ago by price fixing and they can go and take their shoddy practices and shove it.

They are so greedy,that if they had even increased prices by 50%,the market might have bourne it TBH,but when prices double or triple,then its taking the mickey.

Its not like people are on average having doubled or triple their salary each year,so TBH I don't care.

Plenty of industries have issues - imagine if all the food costs tripled within a year due to reasons,then it won't be people moaning,there would be revolution happening.

Imagine if the government said we needed to tackle the deficit and started putting a 200% tax on cars,and that means a £10000 car cost £30000(some countries have this),100% tax on TVs(some countries do this on TVs above a certain size) or that £500 phone has a "luxury" tax and now is £1500.

In the RL people would get well pissed off - even when Marmite went up a few percent look at how much moaning there was.

But people do pay the money, that's the point. DRAM goes into cars, phones, TVs, damned near everything these days.

[CAT-THE-FIFTH]

But people do pay the money, that's the point. DRAM goes into cars, phones, TVs, damned near everything these days.

I finally finished my reply!

Look above. No what happens companies put up with it and the idiot RAM cartels put up prices even more,companies complain to regulators,since OEMs absorb the increases themselves and it affects their own profits. Most of the public won't see the price increase to a degree.

Have you seen cars,phones,TVs,etc double or triple in price. Nope. In RL not forums,people don't have 200% to 300% price elasticity on lots of products. Even 50% would get cries of "ripoff" merchants in tabloids. See what happened when Marmite went up in price?? Dell doing the same??

Then the regulators fine them,100s of millions or billions of dollars and they have screwed themselves over.

Hence why China is threatening to fine them upto $8 billion since they are the largest importer of DRAM in the world,and if that sticks,then so will the EU followed by the US,etc.

The DRAM industry is full of thick idiots when it comes to the business side of things - they could raise prices by smaller amounts,but they make it so obvious,they get governments then investigating them. Then countries like China who import $80+ billion of DRAM last year,realise with a two times increase in cost it makes it viable for them to start investing in making their own RAM,from a cost perspective to a national security one.

Every Chinese tech initiative has been partially driven by external suppliers driving up costs to stupid levels,or export restrictions which affects the profitability of Chinese companies.

So the government steps in and uses public money to push new tech initiatives. The Chinese government is pumping over $100 billion into various tech projects including manufacture,and since these are national projects with an eye to self suffiency and national security they don't even need to be fully financially viable for years.

They poked the Panda and now the Panda decided to swipe them back,and they enabled a competitor who might not even play by the rules either.

Plus in the RL people won't put up with 2 to 3 times increases on finished products. If you think that,then LOL. Even Apple couldn't get away with its "minor" price increase on the iPhone X which certainly wasn't two to three times more than the previous one and sales dropped. People are price sensitive.

Only on the internet seem to really have this weird way of justifying massive increases in the final prices of various mass produced things. Hardware enthusiasts are more likely to put up with 50% to 100% increases in things. The general public - goodness grief no and that's because salaries don't go up that much for most people.

Plus if these companies were employing loads of people here it might be something I could understand.

Even with products like milk which are produced here,and employ UK workers,you could argue for price increases,but people won't even bare a 50% increase in that.

Good luck with RAM produced in another country.

[CAT-THE-FIFTH]

China started investigating the DRAM companies as the price increases were affecting their own companies:


https://digitimes.com/news/a20180614PD212.html

Samsung Electronics, SK Hynix and Micron Technology - the world's top-3 DRAM vendors - could be fined up to US$8 billion in China over alleged price fixing, according to industry sources.

DRAM prices have been rising since 2017, putting pressure on China-based smartphone vendors' profitability. The issue has already drawn the attention of China's Anti-Monopoly Bureau of Ministry of Commerce, which met with Samsung to express its concern in December 2017. Nevertheless, such intervention did not stop DRAM prices from rising further in the first quarter of 2018, the sources indicated.

In May 2018, the Chinese antitrust regulators met with another major DRAM supplier, Micron, to express concerns about the continued DRAM price rally. Later, the regulators launched investigations into Samsung, SK Hynix and Micron, which collectively hold an over 90% share of the global DRAM market, the sources said.

Samsung, SK Hynix and Micron have all confimed the visits of China's antitrust regulators to their local offices. The companies said they would cooperate but did not elaborate.

According to China's antitrust law, Samsung, SK Hynix and Micron could be fined between US$800 million and US$8 billion if found to have engaged in price fixing, the sources noted. The estimated fines are based on their DRAM sales to China in 2016-2017.

The three DRAM vendors, along with Infineon and Elpida Memory, were previously fined by the US for price fixing practices between 1999 and 2002. Infineon has already exited the DRAM business, while Elpida was later acquired by Micron.

China has become the largest consumer of DRAM memory. The country imported US$88.92 billion worth of memory chips in 2017, up nearly 40%. As a result, China's antitrust authority is being encouraged to launch a price-fixing probe like the one that took place in the US in 2002, after receiving a complaint submitted jointly by China's local smartphone and other consumer technology product vendors, the sources said.

Meanwhile, China is striving to raise the country's IC self-sufficiency rate. A few memory startups, such as Yangtze Memory Technologies (YMTC), are being financially supported by their local governments to develop production technologies in-house. By intervening in the memory prices, China also intends to protect its local memory chipmakers' bargaining power in the future, the sources said.

https://www.bloomberg.com/news/artic...gain-quicktake

China is investigating the world’s biggest manufacturers of memory chips to determine whether they illegally conspired to prop up prices, a high-stakes probe that could rattle the technology industry and exacerbate global trade tensions. Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. have all confirmed that Chinese government officials visited their offices, without providing details of the probe. Chinese regulators haven’t disclosed precisely what they are looking for or what evidence they have uncovered. The inquiry comes just as the U.S. and China clash over trade practices, with the Trump administration announcing tariffs on $50 billion of imports and China responding with similar tariffs on hundreds of American products.

1. What do we know about the investigation?

Samsung, the world’s largest chipmaker, Hynix and Micron all said Chinese investigators visited their sales offices in that country on May 31. Together, the three companies control more than 90 percent of the market for dynamic random access memory, or DRAM, chips, which are used to help process data in smartphones, tablets and other devices. All three said they will cooperate with the investigations.

2. Why would China suspect price fixing?

Unlike most electronic components, DRAM chips are openly traded on markets with public pricing -- and there’s been unusual activity in recent months. Prices tend to fall over time as the cost of production goes down and new higher-capacity models replace their predecessors. But last year, prices surged, with a 47 percent jump in the price-per-bit of DRAM that market researcher IC Insights calculates was the largest annual increase since 1978. Samsung, Hynix and Micron say this is simply because of supply and demand -- every customer wants better performance as the creation of videos, photos and gaming causes a surge in data processing. “The pricing rally that the DRAM market has seen over the last two years has clear supply and demand drivers,” said Mike Howard, vice president of memory research at French researcher Yole Developpement.

3. Don’t the chipmakers control supply?

They do have some control. Growth in DRAM bit volume rose 20 percent in 2017, just half the 40 percent rate in 2016, according to IC Insights. DRAM makers were convicted of market manipulation some 15 years ago, with some executives sent to jail. Since then the number of suppliers has shrunk by about half to the three companies under investigation, making potential coordination easier. In addition, chipmaker profits are at record highs: The semiconductor division of Samsung posted an operating profit of 35.2 trillion won on revenue of 74.3 trillion won last year -- a 47 percent profit margin.

The price increase is the biggest in 40 years,and that was 50% last year and prices also rose this year too.

The Chinese government even voiced concerns to the companies,and they ignored them and now China is going to investigate them probably since they thought China was too dependent on them,and it would never happen. Plus China is now going to start producing RAM,and will be pushing them,except this is a state backed competitor,so are playing to different rules.

Just another indication of the utter stupidity of the RAM industry - they pissed off their biggest consumer,ie,China.

Business 101 - don't annoy your biggest customer!

Also,not only do we need to blame the RAM companies for the increases,but it wouldn't surprise me one bit the companies repackaging the RAM also got in on the action too!

[philehidiot]

Question - back in the day cheapo RAM used to be of poor quality and you'd end up with crashes and so on purely due to poor RAM. These days you don't get RAM that actually isn't fit for purpose.

So the question is are we going to see the market flooded with cheap Chinese RAM that supposedly matches the spec for DDR4 (for example) but which has lax tolerances and is prone to single bit errors which cause crashes? Is that a possibility with modern fabs / OS's?