Samsung ex-execs indicted for DRAM price-fixing

A U.S. grand jury has indicted three former semiconductor vendor executives, two from Samsung Electronics Ltd. and one from Hynix Semiconductor America Inc., for their alleged roles in a “global conspiracy” to fix DRAM (dynamic RAM) prices, the U.S. Department of Justice (DOJ) said.

Indicted Wednesday were Il Ung Kim, former vice president of marketing for Samsung’s memory division; Young Bae Rha, former vice president of sales and market for Samsung’s memory division; and Gary Swanson, former senior vice president of memory sales and marketing for Hynix America.

They are charged with being co-conspirators in a price-fixing scheme involving multiple semiconductor vendors between April 2001 and June 2002. The three attended meetings in which the price of DRAM was discussed, agreed to fix prices and exchanged information with competitors on the prices charged to computer makers, according to the indictment.

The three are each charged with participating in the conspiracy to suppress competition in violation of the U.S. Sherman Antitrust Act. The maximum penalty for the conviction of a Sherman Act violation occurring before June 22, 2004, is three years in prison and a U.S. $350,000 fine.

The maximum fines may be increased in certain situations.

Including Wednesday’s charges, four companies and 16 individuals have been charged in the DOJ DRAM price-fixing probe. The investigation has resulted in US$731 million in fines, the second highest total obtained by the DOJ in a criminal antitrust investigation aimed at one industry.

DRAM is the most commonly used semiconductor memory product, used in a variety of devices including PCs, laptops, printers, hard disk drives, PDAs (personal digital assistants), mobile phones, digital cameras and telecommunication hubs and routers. There were about $7.7 billion in U.S. DRAM sales in 2004, according to the DOJ.

Three foreign-based Samsung executives pleaded guilty to the DRAM price-fixing conspiracy in March and August. They agreed to serve prison terms ranging from seven to eight months and to each pay a $250,000 fine. In September, a fourth Samsung executive agreed to plead guilty to the DRAM price-fixing conspiracy.

In addition, four Hynix Semiconductor Inc. executives were charged with participating in the DRAM price-fixing conspiracy and agreed to plead guilty and serve jail terms ranging from five to eight months and to each pay a $250,000 fine. In December 2004, four executives of Infineon Technologies AG pleaded guilty to the DRAM price-fixing conspiracy. The Infineon employees served jail terms ranging from four to six months, and each paid a $250,000 fine.

Four companies have been charged with price-fixing in the DRAM investigation. Samsung pleaded guilty to the price-fixing conspiracy and was sentenced to pay a $300 million fine in November 2005. Hynix, the world’s second largest DRAM manufacturer, pleaded guilty and was sentenced to pay a $185 million fine in May 2005. Japanese manufacturer Elpida Memory pleaded guilty and was sentenced to pay an $84 million fine in March. German manufacturer Infineon pleaded guilty and was sentenced to pay a $160 million fine in October 2004.

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Jim Love, Chief Content Officer, IT World Canada

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