South Korean Company Fined Millions for DRAM Price-Fixing

WASHINGTON, D.C. -- Hynix Semiconductor, a South Korean maker of DRAM (dynamic RAM), has agreed to plead guilty and pay a $185 million fine for conspiring to fix prices in the multibillion-dollar DRAM market, the U.S. Department of Justice said Thursday.

Hynix participated in an international conspiracy to fix DRAM prices, the Justice Department said. Its fine is the third-largest criminal antitrust fine in U.S. history and the largest criminal fine levied by the department since President George W. Bush took office in early 2001.

Hynix's fine follows a $160 million fine paid by German DRAM maker Infineon Technologies in September 2004. Infineon agreed then to cooperate in the Justice Department's continuing investigation of DRAM price-fixing between mid-1999 and mid-2002.

Computer makers including IBM, Hewlett-Packard, and Dell, as well as "countless U.S. businesses and consumers," were victims of the DRAM pricing conspiracy, says Scott Hammond, deputy assistant attorney general for criminal enforcement in the Justice Department's Antitrust Division.

The Justice Department accuses Hynix and other DRAM makers of working together to set DRAM prices, resulting in higher prices for PCs, laptops, and other devices. About $7.7 billion worth of DRAM was sold in the United States in 2004, according to the Justice Department.

"There was almost constant communications between the companies," Hammond says.

Hammond declines to talk about other pending charges, but says the Justice Department investigation is ongoing.

The Justice Department filed a one-count antitrust felony charge against the company Thursday in U.S. District Court in San Francisco. The court will have to approve the fine agreement.

In December 2004, four Infineon executives pleaded guilty to charges related to price-fixing. The four are currently serving jail terms of between four months and six months, and each paid a fine of $250,000. In December 2003, the Justice Department charged a Micron Technology sales manager with obstruction of justice. He pleaded guilty and was sentenced to serve six months of home detention.

In addition to the criminal charges, the DRAM markers face class-action lawsuits brought by customers of DRAM.

A San Francisco-based attorney representing Hynix was not immediately available to comment following a Department of Justice press conference.

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