Smartphone storage chip prices have soared quickly in the past 18 months and it is now being reported that Chinese regulator is keeping a close watch on the companies who are responsible for making these chips. The South Korean companies, Samsung, and HK Hynix are the top two manufacturers of memory chips for smartphones. It is said that China’s National Development and Reform Commision (NDRC) has spoken to Samsung regarding this price surge.
China Daily reports that NDRC could be looking at a possible price fixing strategy by these companies to maximize their profits. The supply of memory chips have been tight in the past few months, but their demand has been increasing, thanks to fast-growing companies like Xiaomi and OPPO. But the shortage of memory chips isn’t something that’s very recent. Remember how Huawei used a mix of eMMC and UFS memory chips in its P10 flagship because of a serious shortage of flash memory chips in the supply chain? So, Huawei’s case isn’t an isolated issue as other companies have also struggled to ensure timely supply of memory chips. For example, a few months back, Reuters published a report stating clients have started accepting long term 6 month supply contracts instead of the traditional quarterly or monthly ones to ensure they have enough supply of memory chips. Even the prices for these chips have risen rapidly in the past few months.
If the regulators come to a conclusion that this is a case of price fixing, it could impose penalties and fines on these companies. Given that foreign (South Korean) firms still hold the technology for making premium 3D NAND chips, it becomes necessary for the Chinese government to take care of the increasing prices to ensure this is not hurting the interest of the domestic smartphone manufacturers.