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The DRAM Crisis: 600% Price Increases by Micron, SK Hynix, & Samsung — Transcript

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0:00Quote, "Since 2022, these firms have
0:02fixed supply and prices for DRM,
0:04engaging in conduct that makes no
0:06economic sense absent collusion, and
0:08that has driven up the price of
0:10conventional DRM approximately 700% in a
0:134-year period." End quote. This is what
0:15a new antitrust lawsuit filed by Beth
0:18Dunn, a firm specializing in high-tech
0:20antitrust cases, states in its puditive
0:22class action complaint against Samsung,
0:25SKH, and Micron. The brand new filing
0:28for this year highlights how the DRAM
0:30market is prone to successful collusion,
0:32citing a severe concentration of
0:34manufacturers, sales of a commodity
0:36product, price transparency via trend
0:38force, inelastic demand, astronomical
0:40entry barriers, and several
0:42opportunities to collude. The suit filed
0:44by Beth Dunn, though underscores
0:46seemingly coordinated actions between
0:48the manufacturers, describing how they
0:50simultaneously restricted output,
0:52shifted priority to HBM, sheld DDR3 and
0:54DDR4, and implemented stricter customer
0:57vetting policies, asking potential
0:59buyers the same exact questions. The
1:01complaint also highlights how due to
1:03surging DRAM prices, DRM has actually
1:06surpassed HBM's profitability for wafer.
1:08While DRAM is used in HBM at multiple
1:11dieseS per HBM chip, the legal filing
1:13seems to instead site conventional DRM
1:15[music] as being higher margin. The
1:18plaintiffs contend that by refusing to
1:20expand supply in spite of all-time high
1:22prices, the manufacturers are openly
1:25acting against their own self-interests,
1:27stating, quote, "Yet contrary to all
1:29economic and business logic, the DM
1:32Oligopouloolists each cut conventional
1:34DRM supply further with Micron going so
1:36far as to shutter its consumer DM
1:39business, Crucial, at the most
1:41profitable point in its history. Prices
1:43continued to rise and still Samsung
1:46and Micron continued to squeeze
1:48conventional DRM supply simultaneously
1:51and publicly directing their resources
1:53toward less profitable per die HBM or in
1:56some cases simply junking conventional
1:58DRAM supply channels altogether. End
2:01quote. Even the manufacturers admit that
2:03conventional DRAM is now more profitable
2:05than HBM which does contain DRM but is a
2:09different part. Recently we have seen a
2:11rise in uh lower spec legacy memory
2:14prices [music] and it is true that
2:16conventional DMs um have higher margins
2:19versus HPM. [music]
2:20>> So yes it is correct that the margins
2:22for nonHBM uh today are higher than HPM
2:26margins.
2:26>> As far as who needs HBM typically it's
2:30this guy.
2:31>> No HBM for you. I need HBM.
2:33>> [laughter]
2:34>> Meanwhile, OEMs and system integrators
2:36are unable to avoid passing these price
2:38increases directly on to consumers.
2:40Within the past year, CyberPower PC, HP,
2:43Dell, Asus, Lenovo, Acer, Framework,
2:45Valve, Nintendo, Sony, Microsoft, and
2:48Apple have all [music] updated price
2:49increases to their products due to the
2:51increased RAM prices. Pre-built PC
2:53company Mang Gear even started a BIO RAM
2:56program telling customers to bring your
2:58own RAM and quote, "We'll build you a
3:00complete PC." End quote. Lenovo recently
3:03joked in a not so funny way that memory
3:06prices would quote never and quote come
3:08back down. [music]
3:19This filing is currently only considered
3:21a puditive class action complaint. While
3:24the plaintiffs brought the case
3:25intending to make it a class action,
3:27it's only an action on behalf of the
3:28individuals named in the complaint right
3:30now until the judge certifies the case
3:33as a class action. If certified, the
3:36nationwide injunctive relief class would
3:38include, quote, all persons and entities
3:40in the United States who indirectly
3:42purchased conventional DRM products,
3:44including DDR3, 4, 5, LP DDR5X, GDDR6,
3:48and 7, and all other DRAM conforming to
3:51Jedex specifications, but excluding HBM
3:54manufactured by one or more defendants
3:56or electronic devices containing such
3:59DRAM during the period beginning October
4:0126th, 2022 through the present. which
4:04they call the class period. End quote.
4:06And they're not the only law firm
4:08investigating this. Recently, attorneys
4:10at Paul LLP contacted Gamers Nexus to
4:13ask us for help explaining the supply
4:15chain of semiconductors. While we can't
4:17disclose the defendants yet, this firm
4:19is also investigating price fixing in
4:21the industry and is seeking any US
4:23buyers of DDR5 memory to contact them to
4:26be a possible plaintiff. Our
4:28understanding is also that one of those
4:29attorneys on the case was involved in
4:31the early 2000s DOJ bust of the DRAM
4:34cartel. So, it's heating up for the
4:35memory makers and possible plaintiffs
4:37include everyone who buys memory,
4:40including consumers who indirectly
4:42bought it through other products like
4:44video cards. Let's dive in to what
4:46appears to be a new DRM cartel with some
4:50old members. We brought you this deep
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6:30Head over to store.gamersac.net And to
6:33support this content directly back to
6:35it. [music]
6:42To understand the present, we need to
6:43analyze the past. Samsung, SKHEX, and
6:46Micron have a long history of illegal
6:48price fixing cartel collusion. We
6:50covered this in our hour and a half long
6:52deep dive documentary on the original
6:54DRM cartel linked below, which also
6:57contains some history about what memory
6:59is and how it got its start. Starting
7:02with actually core memory and rope
7:04memory where they would handwave the
7:06software through reins. Basically at
7:09least 15 manufacturers participated and
7:12over 117 employees from the five largest
7:15manufacturers alone were involved
7:17throughout that collusion period from
7:191998 to 2002. And just as an aside,
7:22there were also earlier alleged
7:25collusion periods we talked about. The
7:26manufacturers exchanged pricing
7:28frequently, upheld price floors, rigged
7:31customer auctions, simultaneously
7:33restricted output to artificially
7:34inflate prices, and even organized
7:36coalitions within the cartel to
7:39eliminate weaker players. The DOJ then
7:41launched its investigation after
7:43noticing spiking DRAM prices, as well as
7:45in response to industry leaders like
7:47Dell, especially at the time, making
7:49comments about quote cartel-like
7:51behavior end quote. Interestingly, it
7:53wasn't until after the DOJ subpoenenaed
7:55Micron and Micron applied for the
7:57corporate leniency program, basically a
8:00snitches don't get stitches from the DOJ
8:02program, that the DOJ then subpoenaed
8:05Micron's fellow cartel members. Shortly
8:07after the DOJ began issuing subpoenas,
8:10iuppy's principal memory analyst
8:12commented via Computer World, quote,
8:14"The major PC vendors really felt they
8:16were getting hit by unified action. They
8:18thought DRAM suppliers were in collusion
8:20to set prices higher, but from the DRAM
8:22industry standpoint, they went from
8:24losing a horrible amount of money last
8:26year to trying to make a little money in
8:28the first quarter, end quote, resembling
8:30the DM over supply in 2022 that preceded
8:34the currently alleged collusion period.
8:36Although they paid hundreds of millions
8:38of dollars in fines, clearly the
8:40manufacturers have done well in the time
8:42since. In fact, several of the employees
8:44were promoted after the cartel,
8:46including one who was involved to CEO of
8:50Samsung Europe. While the original
8:52cartel was brought to a brief pause and
8:54some level of justice, we believe it
8:56laid the foundation for the current
8:58dominance that the big three
9:00manufacturers continue benefiting from
9:02today. At the time, SKH Heinix even
9:04prophesized the big three one day
9:07operating in a legal gray area that
9:09allowed the manufacturers to lawfully
9:11share prices between one another,
9:13stating in 1999, quote, "One of the
9:16advantage of being a big three is to
9:18have the controlling power over the
9:20price and we need to exercise this. One
9:22of our concern is that it is against the
9:24antirust law to set up a certain cartel
9:27price." Andy suggests to encourage
9:29Samsung as the initiator. Why not? if
9:32they accept. We need to have a
9:33communication channel open among the big
9:35three or four. Each management should
9:38share their concern about pricing while
9:40not violating the law. End quote. This
9:42is especially concerning considering
9:44several cartel participants remained
9:46employed well after the DOJ discovered
9:48the cartel like Samson's son Wu Lee for
9:51example. After the DOJ convicted Lee of
9:54violating the Sherman Act, fined him a
9:56quarter million dollars and sentenced
9:58him to seven to eight months in prison,
10:00Samsung promoted the exec to CEO and
10:03president of Samsung Europe, a title Lee
10:05held until 2015. The point is, we think
10:09these companies were more than capable
10:11of rebuilding the cartel with all the
10:13players who remained in or were [music]
10:15promoted to powerful positions post
10:18cartel collapse. and now they have
10:20experience. More recently, in 2018,
10:23Hagen's Burman law firm filed another
10:25class action against the manufacturers,
10:27citing Gamers Nexus and source material
10:30for the memory makers allegedly
10:31violating antitrust laws between 2016
10:34and 2018. The Court of Appeals for the
10:36Ninth Circuit ultimately affirmed the
10:38case's dismissal in 2022 on account of
10:41insufficient evidence. But maybe now
10:44there's enough. [music]
10:51>> [music]
10:56>> As for the conspiracy period in question
10:58today, the new complaint alleges, quote,
11:00"Beginning in October 2022 and
11:02continuing to the present, defendants
11:04have engaged in a coordinated scheme to
11:06restrict the supply of commodity DRAM,
11:08artificially inflating prices throughout
11:10the United States. The scheme has been
11:12executed through a series of parallel
11:14actions that taken together constitute a
11:17comprehensive program of supply
11:18management by agreement. End quote. The
11:21filing describes how after over
11:22supplying the market during the
11:24pandemic, the big three manufacturers
11:26coordinated supply reductions in late
11:282022 and early 2023, starting with
11:31Skhinex in October and Micron in
11:34November. Samsung initially held out. At
11:37the time, an industry analyst reported
11:39via Reuters stated, quote, "Samsung
11:42might be seeing this time as a good
11:43opportunity to increase market share,
11:45which should help it in the long term at
11:48the expense of SKH Highex and Micron."
11:50End quote. Instead of competing, though,
11:52Samsung ultimately followed suit,
11:55announcing its own cuts in April. This
11:57is particularly out of character for
11:59Samsung, which has historically
12:01leveraged its dominance to drive out
12:03smaller firms during market downturns.
12:06An internal Infinion report from 2001
12:08that we uncovered in our DRAM cartel
12:11documentary read, quote, I talked to
12:13deer Makoviaak from Samsung. Samsung
12:15will proceed to take market share and
12:17make life difficult for all weaker
12:19competitors. End quote. Another stated,
12:21quote, I talked with our friend
12:23Makoviaak. They want to kill Hinx and
12:25take their market share. They're ready
12:27to fight to drive prices down
12:29intentionally. The next months might be
12:31horrible. End quote. Today's new
12:33puditive filing describes how Samsung
12:35continued throwing its weight around
12:37long after the original cartel period,
12:39explaining, quote, "In the 2008 to 2009
12:42downturn, Samsung kept producing and
12:44investing while rivals collapsed. Kim,
12:47then among the largest DRM makers,
12:49declared insolveny in January 2009.
12:52Alpa, Japan's last DRM maker, followed
12:56into bankruptcy in 2012. Industry
12:58commentary described the strategy as
13:00winning a game of capex chicken. Samsung
13:03publicly refused production cuts in the
13:052019 downturn as well. End quote. After
13:08Samsung allegedly restricted output with
13:10the others, the big three manufacturers
13:12simultaneously began transferring
13:14substantial production capacity and
13:16capital away from DRAM and towards HBM,
13:19or high bandwidth memory. Throughout
13:212023 and 2024, the manufacturers
13:24continued restricting DRM output in
13:26attempts to stabilize prices. According
13:28to the complaint, referencing some of
13:29the same earnings calls we referenced in
13:32our DRAM cartel documentary where we
13:34stated that the cartel gets around the
13:37no backdoor collusion rule by simply
13:39doing it publicly. The DRM restrictions
13:42signaled their intentions to competitors
13:43through public statements and earnings
13:45reports with phrases like supply capex
13:48discipline or investment efficiency. In
13:51one instance, Micron even stated, quote,
13:53"Tool installation and production output
13:55will be ramped in line with industry
13:57demand growth, which is consistent with
13:59our goal to maintain stable bit supply
14:02share as well as supply discipline." End
14:04quote. The filing points out, quote, "A
14:06commitment to hold stable bit supply
14:08share is a commitment not to take
14:11customers from Samsung or SKHENX made
14:14publicly. It assured them of exactly
14:16that." End quote. And so to the
14:19SLR/Hardware subreddit, a great big we
14:22told you so. Maybe you can accuse the
14:24multiple law firms of clickbait, too.
14:27Anyway, DRM prices were beginning to
14:29stabilize by early 2025. At the time,
14:32Business Korea reported, quote, "DRAM
14:35prices had previously shown double-digit
14:37plunges in September, minus 17.07% and
14:40November, minus 20.59% last year, then
14:44maintained stability for four
14:46consecutive months from December before
14:48turning upward." End quote. Samsung,
14:50SKHX, and Micron also seemingly
14:52coordinated an exit from DDR4 around
14:54this time, each announcing DDR4's EOL
14:57status within a 3-month span of each
14:59other. By third quarter 2025, CTE,
15:02citing Trend Force, reported that DRAM
15:04contract prices had increased by 171.8%
15:09year-over-year. The legal complaint
15:11explains, quote, a 171% price increase
15:14in conventional DRM between quarter 324
15:17and quarter 325, which then continued to
15:20increase to approximately 697%,
15:23is the single most powerful signal
15:25available to induce supply expansion.
15:27The simultaneous decision by all three
15:30defendants to forego a material
15:32commodity supply response is rational
15:35only if each is confident the others
15:38will likewise refrain and the defendants
15:40can therefore ride the surge in prices
15:42to record margins and profits. End
15:45quote. Meanwhile, the smaller DRAM
15:47manufacturers without a stake in the
15:48collusion, namely Windbond, NA, and
15:51CXMT, the Chinese manufacturer we
15:53covered in a separate documentary. We'll
15:55link that below. all expanded their
15:58output, but these companies have never
16:00been part of the big three. The
16:02complaint clarifies, quote, "If
16:04expansion were unprofitable, the
16:06smallest producers with the highest
16:07costs would not have posted record
16:09results doing so. The only firms for
16:12which continued output restraint was
16:14profitable were the three co-conspirator
16:16defendants, so long as not one of them
16:18broke ranks and attempted to take market
16:21share from the others." End of quote.
16:23Then in October, OpenAI announced its
16:25Stargate project in partnership with
16:27Samsung and SKINX, claiming the project
16:30was targeting quote 900,000 DRAM wafer
16:34starts per month end quote which Tom's
16:36hardware estimated quote may represent
16:38around 40% of total DRM output end
16:40quote. Effectively, OpenAI and Sam Alman
16:43issued a letter of intent. Samsung and
16:45SKH Highex effectively conceded the
16:47consumer DRAM market to Micron by
16:49committing such a large percentage of
16:51their DRAM wafer starts to open AI. At
16:54the time, Micron was the only big three
16:56manufacturer with a direct to consumer
16:57sales channel of any meaningful
16:59quantity. Heinox does have Clev, but
17:02they don't really sell much of it. And
17:04Micron was the only manufacturer with
17:06significant capacity for consumer DAM
17:08amidst what it called quote the most
17:10severe memory supply shortage in more
17:12than 40 years. End quote. Rather than
17:14capitalize on the all-time high retail
17:17prices with its unique positioning,
17:19Micron shattered the 29 years worth of
17:21goodwill it built with consumers and
17:23killed Crucial quote in order to improve
17:25supply and support for our larger
17:28strategic customers in faster growing
17:30segments. End quote. Micron announced
17:32its decision only two months after
17:34OpenAI's Stargate announcement for the
17:36memory purchases that is and the
17:38punitive filing contends quote in a
17:41competitive market a firm does not
17:42abandon a high margin segment at the
17:44peak of a price spike particularly where
17:47it has an established direct to consumer
17:49channel that its rivals lack. It expands
17:52into it. That AI data center demand was
17:54strong explains why Micron might wish to
17:57sell more to data center customers. It
18:00does not explain why Micron eliminated
18:02its consumer channel rather than
18:04supplying it when consumer prices were
18:06at record highs and the channel was
18:08highly profitable. End quote. The
18:10complaint then claims beginning January
18:132026 that Samsung SKH and Micron
18:16simultaneously implemented stricter
18:18customer vetting procedures. Tom's
18:20Hardware citing Nicay Asia quotes a GPU
18:22and server supplier who explained quote
18:25the three companies became stricter and
18:27asked us about who we will supply to how
18:30much quantity and if the demand of our
18:32customers are real and quote all three
18:34manufacturers beginning to ask the same
18:36questions at the same time is a huge red
18:38flag of collusion and indicates what we
18:40believe is a coordinated effort. The
18:42filing notes quote in a competitive
18:44market firms differentiate on customer
18:46service. they do not simultaneously
18:48adopt the same order vetting questions
18:51end quote. The complaint continues
18:53describing how despite all the claims of
18:55quote focusing on profitability and
18:58quote while shifting DRAM resources to
19:00HBM, DRM actually surpassed HBM's
19:04profitability per wafer in early 2026.
19:07According to CNBC, quote, "When Micron
19:10makes one bit of HBM memory, it has to
19:12forego making three bits of more
19:14conventional memory for other devices."
19:16end quote. Per our own reporting, due to
19:18yields and DRAM requirements, HPM can
19:21sometimes require 2.3 to three times as
19:24much DRAM die area as consumer DDDR7
19:27memory for the same capacity in bits,
19:30not counting the extra base logic die
19:33and interposer you need for HPM. As
19:35explained in the court documents, quote,
19:36"The 3:1 ratio implies that HBM is the
19:39more profitable use of capacity only if
19:41the profit from one HBM bit exceeds the
19:44profit from three conventional DRM bits
19:46sold into the shortage. Stated as a
19:48threshold, a bit of HBM is the better
19:51use of a unit of capacity only where the
19:53HBM revenue premium per bit multiplied
19:56by the HPM margin exceeds three times
19:59the ordinary margin proxy." End quote.
20:01The complaint cites Micron's second
20:03quarter 2026 financials where it
20:05reported operating margins of 76% for
20:08mobile and client consumer basically 67%
20:12for core data center and 66% for cloud
20:14memory. In the time since, Micron has
20:17posted another quarter that we've
20:18already covered in a different video,
20:20but in that one, Micron reported an
20:23obscenely high consumer memory operating
20:25margin of 86% on 87% gross margin. Just
20:30one year prior. In the same table,
20:32Micron reported 15% operating margin for
20:35the same part of its consumer business.
20:38Again, now 86%. And that's from the same
20:41company that shuttered its consumer
20:43memory direct sales channel. But the
20:45suit cites the prior quarter with
20:47slightly lower margin due to the filing
20:49time. Using Micron's reported mobile and
20:51client business unit, 7.711 billion
20:54quarterly revenue and 76% operating
20:56margin, the complaint calculates, quote,
20:58the operating profit associated with
21:00capturing even a small additional share
21:02of that segment's consumer and client
21:04demand. End quote. to create some tables
21:06and charts. Per the complaint, if Micron
21:08increased its consumer sales by 5%, it
21:11would have received an additional
21:12roughly 293 million in operating
21:15quarterly income or an additional $1.17
21:19billion when annualized. That'd be even
21:21higher on the Q3 filing. The complaint
21:24also calculates a section for the
21:26required HBM revenue premium per bit to
21:28beat three conventional DRM bits as it
21:31corresponds to different HBM margins as
21:33shown in this table. At 70% HPM margin,
21:36the manufacturer needs a 3.26x revenue
21:39premium per HPM bit in order to gain
21:42more profit than three conventional DRAM
21:44bits. In other words, the manufacturers
21:47are leaving substantial profit on the
21:48table by not competing for the consumer
21:51DRM market, something they chose to not.
21:55And even the manufacturers admit that
21:57DRAM has now surpassed HBM's
22:00profitability. In Samsung's first
22:02quarter 2026 earnings call, it stated,
22:04>> "Recently, we have seen a rise in uh
22:07lower spec legacy memory prices. And it
22:10is true that conventional DMs um have
22:13higher margins versus stage PM and we
22:16are aware of certain outside views that
22:19focusing our sales mix on conventional
22:21DMs may be more beneficial uh in terms
22:24of short-term performance versus HBM.
22:26Micron CEO affirmed this in Micron's
22:28second quarter 2026 earnings call
22:30acknowledging
22:31>> so yes it is correct that the margins
22:33for nonHBM uh today are higher than HBM
22:36margins
22:37>> and an SK group chairman reportedly
22:39stated through machine translation quote
22:41the HBM margin is 60% and the general
22:44memory chip margin is 80% end quote as
22:46reported by Korean media outlet News1 we
22:49think one key factor contributing to
22:51this is that HBM contract prices are
22:53negotiated annually while DRAMM contract
22:55act prices are negotiated quarterly,
22:57meaning DRAM prices are going to reflect
23:00market changes faster than HBM. The
23:02complaint asserts, quote, "AI demand
23:04explains why HBM became attractive. It
23:06does not explain Samsung's abandonment
23:08of its historical Maverick strategy,
23:10Micron's exit from Crucial at peak
23:12consumer prices or the uniform refusal
23:15by all three defendants to expand
23:17commodity DM supply in response to
23:19record commodity prices." End quote.
23:21Finally, the document concludes by
23:23explaining how the DRM industry's
23:24characteristics make it particularly
23:26susceptible to successful collusion,
23:28citing the extremely concentrated
23:30market, sales of commodity products,
23:31price transparency from trend forces,
23:33contract price reports, inelastic
23:35demand, insurmountable entry barriers,
23:37and numerous colluding opportunities.
23:41[music]
23:47>> [music]
23:50>> A lot of the alleged collusion today
23:52comes down to the market dynamics
23:54between competitors in the DRM industry,
23:56which Soyon Lee describes well in his
23:59report titled chicken game analysis on
24:02global competition. Using the concepts
24:04of game theory, Lee illustrates how each
24:06manufacturer has the choice to either
24:08expand or maintain or reduce capacity.
24:11If two manufacturers exist and both
24:13manufacturers expand capacity, the
24:15result is an overupp and both receive
24:18lower profits. If one expands while the
24:20other maintains, the manufacturer who
24:21expands earns higher profits and market
24:23share. If both manufacturers choose to
24:25maintain, however, each walks away with
24:27a moderate payout. Pretty basic stuff.
24:30Of course, in a perfectly competitive
24:32market, you don't know how your
24:34competitor is going to play the game.
24:36Additionally, if you somehow knew your
24:38competitor planned to maintain or reduce
24:40capacity, like say if they stated
24:42something like our DRM waiver starts
24:45will remain significantly below 2022
24:46levels for the foreseeable future in the
24:48earnings report, you'd expand capacity
24:50to earn higher profits and seize market
24:52share from your competition.
24:54Unfortunately, while it certainly
24:55appears like the manufacturers are
24:57choosing to not compete from our
24:59perspective anyway, the manufacturers
25:01could claim that this is simply
25:03conscious parallelism. Cornell Law
25:06School defines this market tactic,
25:08stating, quote, "Conscious parallelism
25:10refers to businesses changing their
25:11prices to reflect the prices of
25:13competitors within a market without
25:14colluding or communicating with
25:16competitors." Unlike price fixing, which
25:18involves conscious agreement between
25:20competitors and violating antitrust
25:22laws, conscious parallelism occurs where
25:24businesses just change prices in
25:26reaction to competitors. And conscious
25:28parallelism does not constitute illegal
25:30activity on its own. End quote.
25:34>> [music]
25:36>> This is actually somewhat related to why
25:38the US Court of Appeals for the Ninth
25:40Circuit affirmed the dismissal of the
25:42prior DRAM antitrust lawsuit filed in
25:442018. The court's decision read, quote,
25:47"Plaintiff's factual allegations do not
25:49amount to the something more required to
25:51support a plausible inference of
25:53conspiracy. Dismissal of plaintiff's
25:55claims premised on an alleged agreement
25:57between defendants was therefore
25:59proper." End quote. The current
26:00complaint, the new one, addresses this
26:02aspect from the previously failed case,
26:05stating, quote, "The 2016 to 2018
26:08litigation was ultimately unsuccessful.
26:10Unlike the present action, the 2018
26:12complaint alleged only parallel pricing
26:14without identifying unlawful coordinated
26:17conduct as set forth here. Simultaneous
26:19production cuts, coordinated product
26:21line exits, used equipment withdrawal by
26:23Samsung and SKH, and parallel customer
26:26vetting among other specific facts and
26:28conduct explained in this complaint. End
26:30quote. For context, Thompson Reuters
26:32described section one of the Sherman
26:34Antitrust Act, what the plaintiffs
26:36alleged the manufacturers violated, by
26:38saying this, quote, "Every contract
26:40combination in the form of trust or
26:41otherwise or conspiracy in restraint of
26:44trade or commerce among the several
26:45states or with foreign nations is
26:47declared to be illegal. If read
26:50literally, section one of the Sherman
26:52Act would prohibit every commercial
26:53contract because all contracts cause
26:56some restraint on trade. Fortunately,
26:58courts have found that only agreements
27:00that unreasonably restrain trade are
27:02prohibited. End quote. According to
27:04George Washington University Law School,
27:06we found this explainer. Quote, "Courts
27:08allow a collusive agreement to be
27:10established by circumstantial evidence,
27:12but the evidence must show additional
27:15evidence, plus factors beyond parallel
27:18movement and price." End quote. Thompson
27:19Reuters describes that some of the plus
27:21factors typically accepted in addition
27:23to parallel movements, stating, quote,
27:25"Plus factors include the defendants
27:27acted contrary to their individual
27:29economic interests. The defendants had
27:31meetings or conversations, i.e.
27:33opportunities to agree, the defendants
27:35had a motive to collude, engaged in
27:38abrupt or unprecedented changes in
27:39behavior, and the industry is
27:41concentrated with few competitors." End
27:43quote. We believe that each of those
27:45factors, the plus factors, exist in this
27:48case, but that's not for us to decide.
27:51Ultimately, we'd like to see more from
27:52the DOJ here, like in the early 2000s,
27:55but the current DOJ is uh busy finding a
28:00replacement.
28:00>> One word about Jeffrey Epstein. How
28:04ironic is that? You know why? Because
28:07Donald Trump, the Dow, the Dow right now
28:11is over. The Dow is over $50,000. I
28:15don't know why you're laughing. You're a
28:17great stock trader.
28:18>> Our understanding is that the consumers
28:20never would have discovered the original
28:21DRAM cartel had the DOJ not subpoenaed
28:24the manufacturers in response to both
28:27the increasing prices and the
28:29cartel-like allegations from industry
28:32leaders. To our knowledge, the DOJ
28:34hasn't investigated the DRM manufacturer
28:36since. Be a Don LLP. The firm who
28:38submitted this puditive complaint isn't
28:40the only law firm investigating the DRAM
28:42manufacturers for price fixing right
28:44now. It's heating up. Similarly, a
28:46cross- sector trade association recently
28:48sent a letter to the secretaries of the
28:50US Treasury and Commerce departments
28:52regarding quote an urgent imbalance in
28:55the market for memory chips that could
28:56lead to significant and sustained
28:58near-term price increases for American
29:00households and disrupt critical US
29:02supply chains. End quote. The letter
29:04signed by several national industry
29:05associations urged the US White House
29:08and its administration to among other
29:10requests quote ensure that memory
29:12semiconductor capacity adequately serves
29:15all segments of the market including
29:17consumerf facing and manufacturing
29:19industries and to quote closely track
29:21conditions in the memory market
29:22including with respect to supply and
29:24demand end quote. In the DOJ's Red Flags
29:27of Collusion, it describes its four-part
29:30maps analysis, explaining how you can
29:32analyze an industry's market,
29:34applications, patterns, and suspicious
29:37behavior to detect collusion. Starting
29:39with the market aspect, the DOJ states,
29:41quote, "The award may be the target of
29:43collusion if there are few competitors
29:45in the market that offer a good or
29:46service. A small group of major vendors
29:48controls a large share of the market.
29:50The good or service is standardized so
29:52that the determining factor in the award
29:54is price. rather than other competitive
29:56factors such as design, quality, or
29:58service." End quote. All of these
30:00factors again exist in the DRM market.
30:02Moving to the application section, it
30:04asks, quote, "Are there similarities
30:06between vendor applications or
30:08proposals?" End quote. And while the DOJ
30:10doesn't explicitly mention it in its
30:12examples, we would consider the
30:14manufacturers simultaneously
30:15implementing stricter customer vetting
30:17procedures and asking the same exact
30:19questions as both a similarity between
30:22vendor applications and suspicious
30:24behavior. The post concludes, quote, "If
30:27you notice any combination of these red
30:28flags, you should report your concerns
30:30to the antitrust division." End quote.
30:32While we don't think there's currently
30:34any explicit evidence of collusion, we
30:36think the amount of seemingly
30:38coordinated actions, the unprecedented
30:40price increases and the amount of
30:42consumers who purchase electronics with
30:44RAM should be more than enough for the
30:46DOJ to at least investigate the market
30:48for anti-competitive practices. Of
30:50course, it's not like the US antitrust
30:52agencies currently have any reason to
30:54turn a blind eye to this sort of
30:55behavior. Say, for example, if something
30:58ridiculous happened, like the executive
31:00branch were to garner good PR with
31:01hundreds of millions of dollars of
31:02donations for a memory maker and
31:03likewise grant billions of dollars of
31:04tax breaks while also enacting control
31:06over the DOJ as the executive branch, or
31:08at least it seems that way. But that
31:10would be ridiculous.
31:12>> This is critical capability.
31:15>> So, this filing is currently in the
31:17earliest possible stages, and the judge
31:19is yet to certify this puditive class
31:21action complaint as a legitimate class
31:23action lawsuit. If the judge certifies
31:25the puditive filing as a class action,
31:28the defendants will likely file a motion
31:29to dismiss. If that fails, the case then
31:32enters the discovery period, which is
31:34what they would really want to avoid.
31:36For additional reference, the original
31:37DRAM antitrust litigation filed in 2002
31:41required nearly 12 years between the
31:43plaintiffs initially filing the case and
31:45the court granting the final approval of
31:47settlements. It'll take a while to see
31:49how this plays out, but we'll be here to
31:51cover it, even if it's 12 years from
31:53now, but hopefully it's sooner. That's
31:55it for this one. You should watch our
31:56DRAM cartel history piece that we posted
31:58previously. We'll link that in the
32:00description, and you should open another
32:02tab for our rise of Chinese memory
32:04content about CXMT, a new competitor to
32:08these big three. You can directly
32:09support our work by going to
32:10store.gamersex.net net and picking up
32:13one of our shirts such as our GPU
32:15shredder shirt and we have more micro
32:17slop shirts on the way into the
32:18warehouse. Those have continued to sell
32:20through, so thank you. You can also get
32:22one of our retro.io coaster packs
32:24hearkening back to a better time when
32:26not everything was a cloud-based and
32:28shitified service. Or you can head over
32:30to patreon.com/gamers nexus to throw a
32:32few bucks our way each month. Thanks for
32:35watching. Thanks for your support.
32:36Subscribe for more. And we'll see you
32:38all next time.

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