E-mail messages written by executives at vendors of dynamic RAMs (DRAMs) indicate that the companies conspired to set memory prices and production levels, according to U.S. court documents released this week in the decision dismissing the U.S. Federal Trade Commission’s (FTC’s) lawsuit against Rambus Inc.
The documents point to actions taken by DRAM vendors such as Micron Technology Inc., Infineon Technologies AG, Samsung Electronics Co. Ltd, and Hynix Semiconductor Inc. to set prices in the hopes of killing off a rival standard designed by Rambus.
The U.S. Department of Justice is currently investigating the DRAM vendors on charges of antitrust violations. The e-mail messages stem from a separate FTC case charging Rambus with unfair competition that was dismissed this week.
The DRAM vendors have been involved in litigation for years over charges that Rambus improperly influenced a memory standards-setting body into adopting patented Rambus technology into the synchronous DRAM (SDRAM) and double data rate (DDR) SDRAM standards.
But several recent court rulings have upheld Rambus’ claims that the Joint Electron Device Engineering Council’s (JEDEC’s) policies did not specify the method in which Rambus was required to disclose its patents.
Those decisions clear the way for patent infringement lawsuits on behalf of Rambus against the DRAM vendors. And the evidence disclosed in the FTC ruling gives Rambus’ lawyers ammunition to push claims that the DRAM industry worked together against Rambus and Intel Corp. to ruin the market for Rambus’ memory technology.
Rambus sells licenses for its Rambus DRAM (RDRAM) memory technology based on its patents. The DRAM makers have adopted the JEDEC standard for DDR SDRAM, which is the dominant memory technology used in PCs today. Samsung and Elpida Memory Inc. also license RDRAM.
In the late 1990s, Intel Corp. wanted to make RDRAM a memory standard because it believed RDRAM performance was superior to that of DDR SDRAM. However, RDRAM was a more expensive alternative because it was not available in large volumes, and in order to decrease prices Intel and PC makers urged the DRAM vendors to increase production of RDRAM, according to court documents filed as part of the FTC-Rambus decision.
The DRAM vendors, fearing they would become nothing more than manufacturing plants for Intel and Rambus, began to discuss among themselves how to ward off RDRAM, according to sections of the FTC ruling. Farhad Tabrizi, an executive with Hyundai Electronics Industries Co. Ltd. (now Hynix), told DRAM executives at an industry meeting in 1996 that “we need some united strategy,” according to the documents.
The FTC court documents indicate that the DRAM vendors chose to report inflated production targets for RDRAM chips to Intel and actually produce far fewer chips, thereby keeping the prices high. The documents indicate that industry analyst Bert McComas, now with analyst firm DisplaySearch, advised the DRAM vendors to share production information in order to “walk the fine line between a pleasant shortage and a disastrous over-supply.”
In an interview Thursday, McComas said that he had been encouraging vendors to share information with him, and not with each other. He added that he never witnessed anything resembling illegal or anticompetitive behavior on the part of the DRAM manufacturers. “People were calling me and asking my advice all the time,” he said. “Everyone was staying as far away from (illegal behaviour) as possible.”
The FTC documents cite several instances between 1997 and 2001 in which the DRAM vendors collaborated on production and pricing plans. By keeping production levels low, and prices high, industry companies such as Dell Inc., Compaq Computer Corp. (now Hewlett-Packard Co.) and Advanced Micro Devices Inc. decided to standardize on DDR SDRAM because they felt the prices of RDRAM would never fall.
Intel also followed suit, and by the end of 2001 the transition to DDR SDRAM was well underway. At that point, an e-mail written in late November 2001 from a Micron manager named Kathy Radford suggested that Infineon and Samsung were raising DDR prices, and “the consensus from all suppliers is that if Micron makes the move, all of them will do the same and make it stick.”
DDR prices did go up in the months following that e-mail, prompting complaints from Dell founder Michael Dell.
Dave Parker, director of corporate communications for Micron Technology, declined to comment on the specifics of Radford’s e-mail. He did say the FTC case is “completely unrelated” to the DOJ investigation, and that Micron is “very concerned about that information being taken out of context and represented as fact.”
Micron expects the decision of Administrative Law Judge Stephen McGuire to be appealed before the full FTC, Parker said.
An Infineon spokesperson did not return a call seeking comment.
– With files from Robert McMillan, IDG News Service
