Govt Trade Wars Already Underway Against Multiple Targets

While President Trump's critics continue to attack his trade negotiation tactics, one development is a growing consensus that China should be confronted on trade. In essence, what confrontation did was highlight the reality of an ongoing trade war that the United States wasn't fighting. Similar to how Trump's discussion of immigration won him the Republican nomination and then helped him win the Presidency, his position on trade has revealed a deep well of support that was left untapped by a bifactional establishment that did not allow deviation from free trade orthodoxy.

Meanwhile, critics of monopoly power in Silicon Valley are pleased with the European Union's protection of privacy and fines for big technology companies. Now another attack on technology companies is taking shape, this time memory chip manufacturers. This fuses animosity towards big tech with China's industrial policy goals. A couple of week ago I posted an article from China discussing the development of a domestic memory chip supplier. Chinese Govt Spends Big to Develop Memory Chip Companies. The Chinese government has been spending heavily for more than a decade and it still faces an uphill battle against established producers such as Samsung, Hynix and Micron.

Now two weeks later, China is launching anti-trust investigations against these companies on the heels of an anti-trust lawsuit filed in California.

Nikkei: China launches antitrust probe against US and Korean chipmakers

China has launched antitrust investigations into three American and South Korean chipmakers in what some analysts suspect may be an effort by Beijing to further its high-tech ambitions and gain leverage in its trade row with Washington.

Regulators are looking into Micron Technology of the U.S. and South Korea's Samsung Electronics and SK Hynix, the top manufacturers of DRAM memory chips. These three companies -- which together control more than 90% of the global DRAM market -- are accused of abusing their dominance to drive up chip prices, among other unfair practices, according to a source familiar with the situation.

China, a major production hub for smartphones and other devices, is the world's largest semiconductor market. DRAM prices have climbed steadily since 2016, apparently prompting formal complaints from big Chinese chip buyers. The chipmakers could face heavy fines if regulators find that they violated antitrust law.

...Similarly, the investigations into Samsung and SK Hynix may be an effort to deal with companies that Beijing has found to be less than cooperative on the tech front. Manufacturers including Samsung have been accused of using older technology at Chinese plants than in South Korea, and are leery of cross-licensing patents with Chinese partners, insiders say.

South Korean companies aren't stupid.

A Chinese article on the story cites a California lawsuit that claims these manufacturers agreed to raise DRAM prices.
21st Century: 反垄断审查三巨头 中国存储需警惕“逆周期”扩张

In the Q1-2018 Q1 price increase interval in 2016, Samsung’s storage chip business revenue increased from 79.4 trillion won to 173.3 trillion won, an increase of 118%; Hynix revenue increased from 3.65 trillion won to 8.72 trillion won, an increase. 139%; while Micron’s revenue increased from US$2.93 billion to US$7.35 billion, an increase of 151%.

During the same period, Samsung’s stock price has increased from 25,000 won in early 2016 to 50,000 won today, Hynix has increased from 30,000 won to 90,000 won, and Micron’s share price has soared from US$14 to US$58, an increase of 314%.

It is worth mentioning that during the crazy price increase of memory chips, a US law firm began to investigate this phenomenon. During the interview and investigation of the Big Three by China's antitrust authorities, the US law firm Hagens Berman launched an anti-monopoly class action lawsuit against Micron, Samsung, and Hynix at the Northern California Regional Court on April 27, 2018.

The law said that the investigation showed that DRAM manufacturers agreed to increase DRAM prices by limiting the supply of DRAM. In 2017, the price per bit of DRAM rose by 47%, which was the largest increase in 30 years, of which the price of 4GB DRAM products rose by 130%. As early as 2006, Hagens Berman had acted like a DRAM antitrust litigation and won a $300 million settlement fee for his agent.

One unexpected outcome of the trade wars could be increased scrutiny of corporations and multinationals, and in the United States, a revival of anti-trust law. Government is stepping up its regulation of the economy.