Storage giants are subject to EU antitrust investigation

  Following the China Market Regulatory Authority, the European Commission also launched an anti-monopoly investigation against Samsung, Hynix and Micron. According to informed sources, due to the alleged monopolistic behavior of Samsung, Hynix and Micron, the European Commission began a monopoly investigation on the storage of the three giant hairs.

In the third quarter of 2016, global DRAM and NAND Flash products entered the price increase channel, and after that they maintained a price increase for two years. Even if the production capacity of the late storage products has been able to meet the market demand, the products continue to increase in price. In the three years of 2016-2018, global memory chip products reached US$76.8 billion, US$124 billion, and US$158 billion respectively, and the market size doubled due to price increases.

Most of the memory chips are sold to China. In 2018, China imported storage chips as high as $123.067 billion, a year-on-year increase of 40%, accounting for 78% of the global market. Affected by the rising price of memory chips, consumer electronics products such as mobile phones, SSDs, computers, and memory sticks in the global market have also begun to increase rapidly.

At the beginning of 2018, due to the surge in cost pressure, domestic mobile phone manufacturers collectively complained that the storage giants were suspected of monopolizing price agreements. At the end of May 2018, the General Administration of Market Supervision filed an investigation into the alleged monopolistic conduct of Samsung, Hynix and Micron Technology, and obtained a large amount of evidence from the surprise investigations of the three companies. At the end of 2018, the General Administration of Market Supervision announced at the State Council press conference that "the anti-monopoly investigation of these three companies has made important progress. The next step of the anti-monopoly bureau will define the relevant market of the case, the identification of market dominance, and market dominance. Conduct research and demonstration on the status of behavioral characterization, do a good job in investigating and handling cases, safeguard market fair competition, and protect consumer interests."

In fact, restricting competition through price agreements is a common monopolistic behavior. During the global Internet crisis of 1999-2002, five DRAM companies such as Samsung, Hynix, Infineon, Elpida and Micron reached a price agreement to control the global DRAM market price. At that time, computer companies such as Dell, HP, Apple, and IBM in the United States directly suffered from the cost pressure of price hikes. In 2002, the US Department of Justice began to sue five DRAM companies, and eventually made a total of 729 million US dollars in illegal penalties and monopoly income. fine.

At the same time as the US Department of Justice sued, the European Commission simultaneously launched anti-monopoly investigations on ten DRAM companies such as Samsung, Hynix and Micron. After the investigation was launched, companies such as Micron, Infineon, Hynix, and Samsung successively recognized the monopolistic behavior and applied for leniency. The European Commission imposed a total fine of 331 million euros in 2010, of which Samsung was fined 146 million euros. It is worth mentioning that Samsung is a frequent visitor to the European Commission's anti-monopoly review. In 2010-2016, the EU imposed anti-monopoly penalties on Samsung's price monopolistic behavior seven times.

According to the results of the previous round of DRAM anti-monopoly penalties, the US fine for DRAM price monopoly was 20% of sales revenue during the period. The EU fine is 16% of DRAM sales revenue. This sales revenue includes not only DARM products sold directly in Europe, but also DRAM revenues included in European import servers, PCs and other products.

After experiencing a price increase period of more than two years, NAND Flash and DRAM entered the downtrend channel in 2019, and the market price began to fall sharply due to oversupply. But in the crazy price hikes of the past two years, the storage giants have completed the accumulation of profits and cash. If the previous anti-monopoly penalties are extended, the three storage chip companies may face huge fines.

At present, with China and the EU launching a new round of anti-monopoly review, the storage giants will face global anti-monopoly sanctions.