- Samsung, SK hynix, and Micron face a U.S. class action alleging they coordinated to restrict DDR3 and DDR4 supply, driving DRAM prices up roughly 700 per cent over four years
- Plaintiffs claim the industry’s shift to AI-focused HBM memory was used to justify cutting legacy production in a highly concentrated market with limited new entrants
- The case revives similar claims previously dismissed by courts, with the new complaint arguing the HBM pivot provides fresh evidence of coordination
- Defendants say operations are independent while analysts expect continued price increases and tight supply, with no relief likely before 2028
A new U.S. class action lawsuit filed against Samsung Electronics (OTC Pink:SSNHZ), SK Hynix (OTC Pink:HXSCL), and Micron (NASDAQ:MU) alleges the three dominant memory manufacturers coordinated to restrict output of legacy DRAM products, driving prices sharply higher amid a broader industry pivot toward high-bandwidth memory (HBM) used in AI workloads.
The complaint, Garciaguirre v. Samsung Electronics, was filed on June 25 in the U.S. District Court for the Northern District of California and assigned to Judge Noel Wise. Seventeen plaintiffs — including 14 individual consumers and three small computer businesses — accuse the companies of violating Section 1 of the Sherman Act by engaging in an unlawful agreement to curb supply of DDR3 and DDR4 memory. The plaintiffs claim this conduct contributed to a roughly 700 per cent increase in DRAM prices over the past four years.
Samsung, SK hynix, and Micron collectively control about 90 per cent of the global DRAM market, a concentration the plaintiffs argue enables coordinated behaviour without meaningful competitive constraints. The lawsuit seeks class certification, injunctive relief, and treble damages.
Micron made news recently thanks to its move to keep prices for its products sky-high for another five years, by signing 16 “strategic customer agreements”.
This article is a journalistic opinion piece that has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Allegations centre on HBM pivot
At the core of the complaint is the industry’s shift toward HBM, a specialized form of stacked DRAM used in AI accelerators and data centre GPUs. The plaintiffs allege that the defendants used this transition as a “cover” to simultaneously reduce production of older commodity DRAM standards, including DDR3 and DDR4.
According to the filing, this coordinated contraction created an artificial shortage in legacy memory products widely used in personal computers, embedded systems, and repair markets. Plaintiffs argue that, given the high capital intensity of DRAM manufacturing — with new fabrication facilities costing tens of billions of dollars and taking years to build — potential new entrants were unable to respond, leaving incumbent suppliers free to cut output without losing market share.
Named plaintiffs include small businesses such as Troy’s Computers and My Florida PC, which claim rising memory costs have materially impacted their operations. The complaint also points to recent price increases in Apple’s (NASDAQ:AAPL) iPad and Mac product lines as indicative of broader downstream effects tied to constrained DRAM supply.
Historical context and legal hurdles
The lawsuit revisits familiar legal territory. Samsung and SK hynix have previously faced enforcement actions for DRAM price fixing in the early 2000s, with SK hynix paying a US$185 million criminal fine in April 2005 after pleading guilty.
More directly relevant is a 2018 class action lawsuit filed in the same Northern District of California alleging similar coordinated production cuts among the same companies. That case was dismissed in 2020, and the U.S. Court of Appeals for the Ninth Circuit upheld the dismissal in 2022, concluding that the alleged conduct was “more likely explained by lawful, unchoreographed free-market behaviour” rather than an illegal agreement.
A central issue in that earlier case was the distinction between “conscious parallelism” — where firms in a concentrated market independently adopt similar strategies — and explicit collusion, which is required to establish liability under Section 1. The court found that the plaintiffs’ evidence, including eight so-called “plus factors,” fell short of demonstrating an agreement.
The new complaint attempts to overcome that precedent by introducing the HBM capacity shift as additional context, arguing it provides a clearer mechanism and motive for coordinated supply reductions.
Industry position and market outlook
The defendants have not yet filed formal responses in court. However, all three companies have publicly maintained that their operations are independent and market-driven, with capital allocation increasingly focused on higher-margin HBM products to meet surging AI demand.
Executives from Samsung, SK hynix, and Micron have also warned in recent quarters that tight memory supply conditions could persist for several years, particularly as production lines are retooled for advanced nodes and HBM packaging.
Market analysts broadly expect continued upward price pressure. Jefferies forecasts DRAM prices could rise another 40 per cent to 50 per cent in the third quarter, followed by an additional 30 per cent to 40 per cent increase in the fourth quarter, with no meaningful supply relief anticipated before 2028. These projections reflect both structural demand growth from AI infrastructure and constrained industry capacity for legacy DRAM products.
Implications for investors
For investors, the lawsuit introduces a layer of regulatory and legal uncertainty into an already supply-constrained market. While antitrust claims are inherently difficult to prove — particularly given the high bar established by prior rulings — the case could draw renewed scrutiny to pricing dynamics and capacity decisions within the DRAM sector.
At the same time, the underlying industry fundamentals remain largely intact. The shift toward HBM is widely viewed as a strategic necessity rather than a temporary cyclical adjustment, with AI workloads driving a multi-year transformation in memory demand.
Whether the plaintiffs can distinguish this case from earlier unsuccessful litigation may determine its trajectory. For now, the allegations remain unproven, and the defendants’ responses — along with any motions to dismiss — will likely shape the next phase of proceedings.
While SK hynix and Samsung stock both closed higher in their home stock markets, Micron Technology stock (NASDAQ:MU) closed half a per cent lower on Monday, following this news.
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