In December 2017, an official from China’s top economic regulator—the National Development and Reform Commission (NDRC)— noted that the agency was “on alert” following a forty-seven percent spike in prices. Added to this, the NDRC suggested that DRAM manufacturers were engaged in price fixing. The announcement was directed at Samsung, SK Hynix, and Micron. In February, Samsung inked a new memorandum of understanding with NDRC’s Department of High-Tech Industry to cooperate in chip making, artificial intelligence, and semiconductor manufacturing, even while an NDRC official claimed the deal had “nothing to do with the price rises of storage chips.” By May 31, investigators from China’s State Administration for Market Regulations had reportedly visited the China offices of Samsung, SK Hynix, and Micron marking the official launch of an investigation.
China’s price-fixing investigation has now inspired a class-action lawsuit in the U.S. against Samsung, SK Hynix, and Micron in April, just four months after NDRC went public with its suspicions, by U.S. law firm Hagens Berman, a formidable plaintiffs firm and has experience litigating against DRAM manufacturers.
U.S. lawmakers must recognize that reliance on foreign semiconductors is untenable for Chinese technocrats. As a result, China will use asymmetric tactics, including lawfare, to achieve its aims. These tactics will only become more sophisticated as Chinese entities seek workarounds against new legislative efforts to hinder or outright block Chinese efforts to achieve semiconductor dominance. If America’s objective is to keep China from obtaining sensitive core technologies, it must develop integrated investment review procedures with allies and adopt an offensive approach to monitoring and responding to Chinese tactics outside the reach of CFIUS.