Though it's much easier said than done, China is hungry to reduce the market power of the DRAM industry's Big Three.
Earlier this week, reports arrived that Chinese regulators are probing Micron (MU) - Get Report , Samsung (SSNLF) and SK Hynix for alleged price-fixing, and have visited their local offices. The probe follows a giant 18-month rally for DRAM prices that has provided a huge lift to the top and bottom lines of all three companies -- and pressured the margins of hardware makers in China and elsewhere.
However, no evidence has emerged to date indicating the Big Three have engaged in overt price-fixing -- rather, they seem to be trying to keep DRAM supply from exceeding with the help of the public disclosures each firm is making. Moreover, China's massive electronics industry can't afford to see its DRAM supplies disrupted by a fight between Beijing and the Big Three.
On the other hand, China's efforts to become a major DRAM and NAND flash memory supplier (via local manufacturers getting state support) could eventually become a serious problem. However, this push is still in its early stages, and China's DRAM makers still have a ways to go in catching up to theBig Three in terms of manufacturing technology.