Lawsuit Claims RAM Manufacturers Are Colluding to Inflate Prices

The current buzz in the tech world revolves around a significant RAM shortage, often referred to as RAMageddon or the RAMpocalypse, which has led to skyrocketing hardware prices. Initially, it was believed that the surge in demand was primarily due to the rapid expansion of AI data centers. However, a recent class action lawsuit against major RAM manufacturers claims that these companies are manipulating market conditions to artificially raise prices.

The lawsuit, brought forth by 14 individuals and three businesses, accuses Samsung, SK Hynix, and Micron of colluding to fix prices and control the supply of DDR3 and DDR4 RAM, resulting in inflated costs. The suit states, “This lawsuit seeks to recover for—and stop—concerted anticompetitive behavior by three oligopolists in the market for dynamic random access memory, more commonly called DRAM.”

DRAM is crucial for nearly all computing devices, as it temporarily holds data. Together, Samsung, SK Hynix, and Micron dominate over 90% of the global DRAM market. The lawsuit alleges that these companies have “fixed supply and prices for DRAM, engaging in conduct that makes no economic sense absent collusion and that has driven up the price of conventional DRAM (sometimes called commodity DRAM) approximately 700% in a four-year period.”

The lawsuit highlights a puzzling trend: despite the increasing demand for DRAM, these companies have reduced production to prioritize less profitable High Bandwidth Memory (HBM), typically used in data centers. This reduction in DRAM output has led to significant price hikes for consumers, further inflating the cost of electronics.

Interestingly, this isn’t the first time these companies have faced scrutiny. Between 1998 and 2002, Samsung, Hynix (the predecessor of SK Hynix), and Micron were involved in a criminal conspiracy to fix DRAM prices for major American computer manufacturers. Following a Department of Justice investigation, Samsung paid a $300 million fine, Hynix was fined $185 million, and Micron avoided penalties by cooperating with authorities. Several Samsung executives even served prison time. Additionally, the trio was investigated by the Chinese government during a RAM price surge from 2016 to 2018.

In terms of damages, the lawsuit seeks a permanent injunction to “remedy the ongoing effects of Defendants’ unlawful and anticompetitive conduct, including requiring Defendants to cease coordinated supply restriction and to restore competitive conditions in the conventional DRAM market.” It also aims to secure damages for the plaintiffs and affected classes.

The impact of rising RAM prices is being felt across the gaming industry, with console manufacturers facing increased costs. Valve’s Steam Machine saw its price rise by several hundred dollars, while Sony, Microsoft, and Nintendo have all raised the prices of their consoles. The Xbox Series X now costs $300 more than its launch price, and the base PS5 is $150 pricier than it was on day one. With hardware costs climbing and games like Grand Theft Auto 6 priced between $80 and $100, gamers are facing challenging times.