Report: Chinese government investigating possible NAND price fixing

Building a machine in 2017 was painful. Here at the end of the year, we're looking at average per-gigabyte SSD prices that are the same or even higher than they were a year ago. It's a frustrating situation. According to the state-run China Daily newspaper, that nation's National Development and Reform Commission is getting fed up with NAND chip prices as well. The paper quotes an official with the NDRC who says that the commission "will pay more attention to future problems that may be caused by 'price fixing'" in the memory market.

Samsung UFS SSDs.

The newspaper goes on to specifically note Samsung as a corporation-of-interest in the matter. The commision reportedly contacted Samsung but hasn't taken any action yet. The NDRC says it was alerted to the situation based on the rapid increase in flash memory prices over the last 18 months. The agency also says that it's too early to predict what sort of actions would be taken, but if anyone is found engaging in price-fixing, it could use penalties issued by other nations as a reference for its own measures.

Don't get too excited yet, gerbils, because the investigation isn't a formal accusation. As China Daily points out, smartphone manufacturers have put insanely-high demand on the memory market. It's possible that the high prices are simply the result of basic supply-and-demand economics at work. However, this wouldn't be the first time that memory manufacturers have colluded on pricing. Back in the early 2000s all of the largest memory manufacturers—Hynix, Infineon, Micron, Samsung, and Elpida—were found to be guilty of price-fixing collusion and faced heavy fines from the US government.

For our part, we've had to scale back our storage recommendations in our system guides due to the high prices of SSDs. A lot of folks in a lot of places (including right here in our comments) have been grumbling about the continued presence of painfully-slow spinning rust in low-end machines, too. Whatever the actual cause for the elevated component prices, here's hoping that 2018 provides relief.

Comments closed
    • smilingcrow
    • 2 years ago

    Many people are rightly mentioning the illegal cartel behaviour but that’s only one half of the picture.
    The other is that the memory makers have also been caught out a number of times with massive over supply that left them with such large losses that they required government bailouts.
    That alone would make them wary of increasing supply too quickly.
    Not that this doesn’t mean they weren’t also colluding but don’t forget the other factors.

    • Chrispy_
    • 2 years ago

    [quote<]smartphone manufacturers have put insanely-high demand on the memory market[/quote<] Is there any evidence of this? All the hard, empirical evidence I've seen from Gartner, IDC etc says that the global smartphone market growth rate peaked between 2012 and 2014. Sure, the market is still growing, but it's nowhere near as demanding on the memory market as it was during those years. All of the players in the memory market are proven dirty from multiple previous convictions; This is one of those "guilty until proven innocent" situations, AFAIC.

      • HERETIC
      • 2 years ago

      Is there any evidence of this?
      As a real wild guestimate-even if same no of phones-
      I’d guess RAM in phones has doubled since then,and NAND has tripled.
      Is there any collusion? probably……………………….

      • watzupken
      • 2 years ago

      Not true actually. Despite the studies you mentioned, most phones back then were happy with 2/3GB of ram, and between 32 to 64GB of storage. Nowadays, 4GB of ram is the norm, going up to 6GB and some 8. Storage have ballooned to a min of 64 to as much 256GB.
      Having said that, the current situation for Nand and Ram is likely a combination of high demand and “restricted” supply by all the manufacturers. A slow increase in supply to meet demand, whether intentional or unintentional will cause the price to increase.

        • Anonymous Coward
        • 2 years ago

        Hah, so we should be expecting major CPU shortages because the number of cores is going up, is that basically what you are saying? Those poor manufacturers can’t keep up with that big scary doubling of capacity, [i<]boo hoo[/i<]! A shame about those [i<]prices[/i<], but its an [i<]accident[/i<].

        • Chrispy_
        • 2 years ago

        Except the number of RAM/NAND packages hasn’t changed. The capacity increases are largely because the capacity per package has increased due to process and design advances. Making a single package now is much the same amount of work as it has always been, give or take – so that line of reasoning is definitely not responsible for the increased prices.

    • limitedaccess
    • 2 years ago

    Those “heavy fines” as a deterrent is a joke for DRAM. Unless they plan on issuing potential fines in the $5-$10 billion range per player fines won’t be a deterrent at all.

    Micron alone is reporting an increase in quarterly profits several times more per quarter than the entire DRAM industry was fined by the US Government during the price fixing in the early 2000s. Micron has the smallest share of the big 3 who together control 95% of the market.

    People are seriously naive if they don’t think something fishy is going on behind the scenes. The industry is much more consolidated now compared to the early 2000s. They know any potential fine is going to be wrist slap compared to what they benefit from.

    Heavy smartphone demand is a smokescreen. Do people think that analysts were unaware of smartphones and did not factor them in for demand forecasts? Smartphones aren’t some new device suddenly anymore taking the world by storm. I guess it’s pretty convenient for them that they all just under estimate demand and planned supply just under enough to stay right behind the real demand curve.

      • DavidC1
      • 2 years ago

      Fines just hurt the average employees.

      Any crimes that are significant should be treated as such. If criminal charges are laid to those responsible, companies would actually stop doing these things. Whether price fixing justifies a criminal charge is another matter of course.

      • CaptTomato
      • 2 years ago

      This is why governments can’t be trusted, they work on behalf of industry and treat us like fools with their 1 cent on the dollar demerits.

        • Anonymous Coward
        • 2 years ago

        Conclusion: nobody can be trusted.

          • CaptTomato
          • 2 years ago

          No, we remove the incentive for corruption, namely money.

    • HERETIC
    • 2 years ago

    Read a few times during the year that Ram prices were high because manufacturers
    had moved Ram lines to Nand because of demand.
    If true-that should give Nand makers a out-“We were trying our best to supply demand
    and keep prices down”
    Could be very damming if a Ram investigation thro.

    • albundy
    • 2 years ago

    i remember when the memory manufacturers were hit with the fines. i got a nice big check in the mail from the dram settlement. although…i consider it more of a long term rebate, lol. cant wait for the next one on ddr4! the prices have been insane!

    • sleeprae
    • 2 years ago

    I’m actually more irritated with DRAM pricing than NAND. I don’t know if there’s price fixing or collusion, but hopefully retail prices for both IC types see improvement in the new year.

      • limitedaccess
      • 2 years ago

      You won’t see that relief until 2019 at the earliest. This is when there are expectations that Chinese fabs will come online and start supplying the market. This will also be when the existing big 3 start to push out more capacity as well. Really convenient for them that their capacity expansion comes at a time when outside players will start competing for market share but not before.

    • DragonDaddyBear
    • 2 years ago

    In terms of raw materials isn’t an SSD cheaper than an HDD? Is it possible that once there is sufficient manufacturing capacity that SSDs will role the land?

      • Wirko
      • 2 years ago

      It’s also possible that iPhones will be sold by the pound, but it’s not probable.

      • Pancake
      • 2 years ago

      Yep. Everyday a couple of guys from Samsung drive a truck down to the beach and load up with some sand. They’re very good at what they do and years of experience allows them to select the finest quality sand for different applications – NAND, RAM, CPUs etc.

      • DavidC1
      • 2 years ago

      That seems like a very naive view of looking at the world. Wood is basically everywhere, but you get charged for the services carpenters provide when you buy wood furniture. Leonardo da Vinci’s “Salvator Mundi” sold for $450 million recently, but the raw value is in cents because its drawn on paper.

      Likewise, while raw materials cost is extremely low, the amount of time, money, and effort required to make sand into a silicon chip is very high.

      Aside from that, the perception of value is basically set by those that agree a certain value is right. That consists of vast different number of individuals and entities, including customers.

    • CScottG
    • 2 years ago

    It’s not just NAND.. they should also be taking a DIMM view of system memory pricing (..where those producers are currently making quite a DIMM sum).

      • rnalsation
      • 2 years ago

      *ba dum tss*

      • willmore
      • 2 years ago

      I’d like a SIP of whatever he’s having.

        • Bobs_Your_Uncle
        • 2 years ago

        Perhaps you’ll first need to consume quite a few [b<]BYTES[/b<] if we're truly talking [url=https://www.wikiwand.com/en/Dim_sum<]DIMM SUM[/url<] here (or even WRT producer margins). As DIMM sum is typically accompanied by tea though, by all means, SIP as much as you like.

          • willmore
          • 2 years ago

          I think you’re bing a bit of a DIP.

      • anotherengineer
      • 2 years ago

      Indeed, it’s sad when they are blaming supply and demand, yet the supply seems to be very good at e-tailers, leading me to believe there isn’t a supply issue.

      Just a blatant mark-up issue.

      [url<]https://pcpartpicker.com/product/MZwqqs/gskill-memory-f43200c14d32gtz?history_days=730[/url<] [url<]https://www.statista.com/statistics/271725/global-dram-revenues-of-semiconductor-companies-since-2010/[/url<] I mean if there was a tight supply constraint, wouldn't the price of the product offset the supply so that profits remain equal????

      • Mr Bill
      • 2 years ago

      Ssssshhh! You might tip over the Apple Cartel.

    • NTMBK
    • 2 years ago

    The protectionist Chinese government is sticking the boot into Korean conglomerate? Shocker.

      • rnalsation
      • 2 years ago

      😮 [url<]https://i.imgur.com/KZcuniI.jpg[/url<]

      • NovusBogus
      • 2 years ago

      Remember kids, price fixing is only bad when someone else is doing it!

        • CaptTomato
        • 2 years ago

        IOW, capitalism is a corrupt joke as everyone is doing it, but only the weak get caught/fined/jailed…

          • NovusBogus
          • 2 years ago

          That’s how everything works–case in point, allegations of protectionism and cronyism on the part of China’s communist regime. But at least with capitalism there’s a chance for someone to become strong without engaging in political shenanigans–with the others, everyone’s either Inner Party or a disposable peasant.

            • CaptTomato
            • 2 years ago

            hahahahaha, no one becomes strong without lobbying/buying politicians, the entire system of MONEY is the problem, good news is that we can now dispense with all forms of currency via a robot/machine/AI NWO, ie, the machines do ALL the work, they run the entire economy, this dispenses with money, politicians, the bulk of crime including resource wars.

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