Key Takeaways:
A class-action lawsuit filed in California federal court accuses the world's three largest memory-chip makers of colluding to restrict DRAM supply, sending prices up roughly 700 percent over four years.
Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. were sued June 25 in the US District Court for the Northern District of California on allegations they conspired to cut production of DDR3 and DDR4 memory chips under the cover of transitioning to high-bandwidth memory for artificial intelligence, according to the complaint reviewed by Edgen. The plaintiffs, represented by New York-based Bathaee Dunne LLP, are seeking injunctive relief and unspecified damages for consumers and businesses that purchased DRAM-containing products during the price surge.
"The defendants used the AI-driven HBM transition as a pretext to starve the commercial DRAM market of supply, generating hundreds of billions in excess profits at the expense of consumers," the complaint alleges. The lawsuit cites Apple Inc.'s recent price increases across its iPad and Mac lineups as a direct example of how the alleged collusion cascaded through the supply chain to end buyers.
DRAM prices have climbed roughly 700 percent since early 2022, according to data cited in the filing, as the three companies — which control more than 95 percent of the global DRAM market — shifted fabrication capacity toward HBM (a specialized memory type stacked vertically for AI accelerators) while reducing output of standard DDR chips used in PCs, laptops and servers. The complaint notes that Samsung and SK Hynix previously pleaded guilty to US criminal price-fixing charges in the 2000s, paying a combined $731 million in fines, with several executives serving prison sentences.
The legal overhang compounds an already dire pricing outlook for downstream buyers. Jefferies analysts forecast DRAM prices will rise another 40 percent to 50 percent in the third quarter from the prior three months, followed by a 30 percent to 40 percent sequential increase in the fourth quarter. The research firm expects prices to climb 40 percent to 45 percent year-over-year through 2027, with meaningful relief unlikely before 2028.
Why the shortage is different this time. Unlike the 2000s price-fixing episode — which involved explicit collusion among executives meeting in hotel rooms — the current supply tightness has a genuine demand driver: AI data centers are consuming vast quantities of HBM, with each Nvidia Corp. H100 or Blackwell GPU requiring six to eight HBM3e stacks. Micron has signed 16 strategic customer agreements under a five-year plan, locking up supply for hyperscalers including Microsoft Corp. and Amazon.com Inc.'s AWS. The shift leaves less wafer capacity for commodity DDR, creating what Lenovo Group Ltd. has called a "new normal" of elevated memory costs that may persist through the end of the decade.
The downstream toll is mounting. Apple raised prices across its hardware lineup this year, citing component cost increases. Valve Corp. attributed the $1,049 launch price of its Steam Machine to RAM shortages, saying it had expected component costs to fall rather than rise. Corsair Memory Inc. added tamper-evident seals to its RAM packaging in February to combat scammers exploiting the scarcity. Sony Group Corp. has said it secured enough DRAM for PlayStation 5 production through 2026 but warned that pricing remains under pressure.
For investors, the lawsuit introduces a new layer of legal risk for the three memory makers. Samsung shares trade at 1.4 times book value, SK Hynix at 1.8 times and Micron at 2.1 times forward earnings — valuations that may face compression if the case advances or invites regulatory scrutiny from other jurisdictions. The companies have said they are expanding fabrication capacity, with new plants in Texas, South Korea and Japan scheduled to come online from 2027, but those additions may arrive too late to ease the current cycle.
This article is for informational purposes only and does not constitute investment advice.
