Of Conspiracy Theories and Artificial Chip Pricing

Back March 23, 2006, 3 Samsung executivers pleaded guilty for DRAM price-fixing, reported on Inq7.net here, and I blogged about it here.

And now, there are new allegations of artificial pricing involving chipmakers, here. Excerpt:

The complaint, to be filed in U.S. District Court for the Northern District of California, charges the companies with fixing DRAM chip prices, artificially restraining supply and rigging bids for contracts.

Those actions caused computer makers such as Apple Computer , Compaq Computer, Dell, Gateway, Hewlett-Packard Co. and International Business Machines Corp. to pay more for chips and then pass those costs on to consumers, said Florida Attorney General Charlie Crist, another lead plaintiff in the case.

The largest four of the DRAM makers — Samsung, Hynix, Micron and Infineon — and their U.S. units control roughly 70 percent of the U.S. market, which in 2003 represented about $5 billion of the $17 billion in worldwide sales.

I remember reading a National Geographic article years ago about the computer chip, and how one day manufacturing costs would go so low so as to make the cost equivalent to that of a bottlecap.

That article stuck in my head through the years, and the concept of diminishing returns supports the idea. After so much input, there can only be so much output. So why was cost still so high?

It could’ve only been external factors, and these articles prove it. Its amazing when such things as market forces and economic principles make things fall into place.

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2 thoughts on “Of Conspiracy Theories and Artificial Chip Pricing

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