E-mails between competing company executives may form the basis of an anti-trust court case against the computer memory market.
As part of an FTC investigation into Rambus over unfair competition claims (dismissed earlier this week) a number of e-mails between top executives at Micron, Infineon, Samsung and Hynix appear to show collusion with regard to setting prices and production levels for DRAMs.
The intention was to set prices to kill off Rambus' rival standard, RDRAM, in preference to their own DDR SDRAM, according to an FTC filing. It quotes Farhad Tabrizi, an executive with Hyundai (now Hynix), in 1996, telling DRAM executives at an industry meeting that "we need some united strategy".
It goes on to state that the DRAM vendors chose to report inflated production targets for RDRAM chips to Intel while actually producing far fewer chips, thereby keeping the prices high. Industry analyst Bert McComas, now with DisplaySearch, is quoted as advising the vendors to share production information in order to "walk the fine line between a pleasant shortage and a disastrous over-supply".
McComas has supported his comments saying 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 behavior) as possible."
But the FTC cites 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, big companies such as Dell, Compaq (now HP) and AMD decided to standardise on DDR SDRAM.
Intel soon followed suit, and by the end of 2001 the transition to DDR SDRAM was well underway and the co-ordination between the memory vendors put to a different use. An e-mail written in late November 2001, from a Micron manager named Kathy Radford, suggested 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 but 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".
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 SDRAM (synchronous DRAM) and DDR (double data rate) 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. 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 RDRAM (Rambus DRAM) 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 also license RDRAM.