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SEOUL, June 20: A US antitrust investigation into the 12 billion dollars global memory chip industry that has swept up the world’s four biggest players, widened on Thursday to include smaller chipmakers in Taiwan and Japan.
The world’s top four makers of dynamic random access memory (DRAM), accounting for 70 per cent of the market last year, confirmed they are part of the probe, which appeared to focus on the sharp price swings that have battered the industry since last fall.
“The investigation will weaken chipmakers’ bargaining power over computer makers,” said Samsung Securities in a research note. “But we don’t expect the authorities to find out material evidence that chipmakers have violated regulations as they are still suffering from volatile chip prices.”
Those targeted include first- and third-ranked DRAM makers Samsung Electronics Co and Hynix Semiconductor Inc, both of South Korea, as well as Micron Technology Inc of the United States and Germany’s Infineon Technologies AG
Two Taiwan chipmakers were added to the list on Thursday, as the island’s biggest memory chipmaker Nanya Technologies and the smaller Winbond Electronics said they had received a demand for information from a grand jury in a US district court in California.
A grand jury considers whether enough evidence exists to bring criminal charges.
SMALL FISH: Taiwan’s DRAM manufacturers are relatively small fish in the memory chip industry, with combined global market share of less than 20 per cent.
In Japan, Elpida Memory Inc, the number five DRAM maker in the world, said its US sales unit had received a subpoena as well. Elpida is a joint venture between NEC Corp and Hitachi Ltd.
The chipmakers have denied violating any anti-trust regulations.
DRAM chips are the most common memory chips used in personal computers and are based on a single design that has made this a cut-throat industry where sheer size and low production costs are the means to compete.
Asian DRAM chipmakers’ shares posted further losses on Thursday after skidding the day before.
Samsung, which lost four per cent on Wednesday, shed another 2.2 per cent to 341,000 won while Hynix Semiconductor reversed earlier losses to close unchanged at 290 won. It sank 13 per cent on Wednesday.
In Taipei, Nanya Technologies closed down 2.61 per cent at T$3.60 while Winbond bounced off session lows, slipping 0.97 per cent to T$20.50. Both companies said they would fully cooperate with the probe.
Germany’s Infineon was down 1.88 per cent at 15.7 euros after losing 4.8 per cent on Wednesday, when Micron shares sank 15 per cent to $20.08.
“The DRAM business is highly competitive and subject to extreme volatility,” Micron Vice President of Corporate Affairs Kipp Bedard said in a statement on Wednesday. “Competitive forces in today’s market have led to DRAM prices reaching unprecedented lows.” Micron is the world’s second biggest DRAM maker.
Memory chip makers had been battered by competition so fierce that it has driven prices below the cost of production. Analysts said US regulators might be looking into whether memory makers had teamed up to keep prices low in order to drive out weaker rivals, thereby easing future competition.
HOLDING STEADY: At least one institutional investor in Samsung said he was holding steady for now.
“We take long-term view on the stocks (of Samsung),” said Robin Parbrook, deputy head of Asia ex-Japan at Schroder Investment Management in Hong Kong.
But Parbrook said his company may have to start reshuffling its stock portfolios if it became clear the situation was likely to hit prices hard.
Analysts said the case might have resulted from complaints by computer makers after memory chip prices had a brief spike earlier this year to a high of $4.80 from below $1 in November.
Standard 128-megabit DRAM chips trade at around $2.60 on the spot market, chip trader ConvergeTrade said.
The price rise drew the ire of Michael Dell, the chairman and chief executive of Dell Computer Corp, who at one point said the memory makers might be acting like a cartel.
Dell, the world’s second-largest PC maker, decided to take part of its DRAM business to Nanya to take away some of the pricing power of the big four that dominate the market.
Given that the price rise early this year was more a factor of reduced supply than an increase in demand, chipmakers seen lowering supply and those engaged in consolidation talks might come under greater scrutiny, analysts said.—Reuters
