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Samsung Admits Guilt, Fined $300M in DRAM Price-Fixing Suit

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SAN JOSE, Calif., Dec. 1 -- In the culmination of an agreement reached in October, Samsung Electronics Company Ltd. (Samsung), a Korean manufacturer of dynamic random access memory (DRAM) and its US subsidiary, Samsung Semiconductor Inc., pleaded guilty in US District Court on Wednesday to charges of participating in an international conspiracy to fix prices in the DRAM market and were fined $300 million. The fine, to be paid with interest in installments over the next five years, is the second-largest criminal antitrust fine in US history and the largest criminal fine since 1999, according to the Department of Justice.

DRAM is the most commonly used semiconductor memory product, providing high-speed storage and retrieval of electronic information for a wide variety of computer, telecommunication and consumer electronic products.

According to prosecutors, from April 1, 1999, to June 15, 2002, Samsung and Samsung Semiconductor conspired with other DRAM makers to fix the prices of DRAM sold to certain computer and server manufacturers. The computer makers directly affected by the price-fixing conspiracy were Dell Inc., Compaq Computer Corporation, Hewlett-Packard Co., Apple Computer Inc., International Business Machines Corp. and Gateway Inc. The deal did not seek restitution from Samsung. Instead, victims -- ranging from other chip makers and computer makers to private individuals -- can sue the company for damages.

Samsung is the third major semiconductor company to plead guilty to fixing DRAM prices through e-mails, telephone calls and in-person meetings. Korean manufacturer Hynix Semiconductor Inc. was sentenced to pay a $185 million criminal fine in May 2005, and German manufacturer Infineon Technologies was sentenced to pay $160 million in October 2004. In December 2004, four Infineon executives -- T. Rudd Corwin, Peter Schaefer, Gunter Hefner and Heinrich Florian -- pleaded guilty to the DRAM price-fixing conspiracy. All four Infineon employees served prison terms ranging from four to six months and each paid a $250,000 fine. Three of the charged Infineon employees are German citizens. In December 2003, Alfred P. Censullo, a regional sales manager for Micron Technology Inc., was sentenced to six months of home detention after pleading guilty to having withheld and altered documents in response to a grand jury subpoena served on Micron in June 2002.

To settle the case with Samsung, the government agreed to not pursue additional prosecutions against Samsung or most its officers and employees, and Samsung agreed to cooperate in the continuing investigation of other DRAM producers. According to published reports, seven people, including Samsung Semiconductor President Y.H. Park, are specifically excluded from protection and could still face prosecution. The others are Tom Quinn, senior vice president of sales and marketing for memory products; marketing vice presidents Kim Il-ung and Kang Yeong-ho and memory chip sales vice presidents Lee Sun-woo and Lee Young-woo. The seventh, Rha Young-bae, is no longer with Samsung.

According to reports, the outcome of the investigation also is expected to help fuel a private antitrust case filed by Rambus Inc., which licensed a memory technology that had been embraced by Intel Corp., the world’s largest maker of computer microprocessors, but which was resisted by chip makers who didn't want to pay Rambus royalties.

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Dec 2005
$300 millionchip makersCommunicationscriminalDellDepartment of JusticeDRAMguiltyHynixInfineonIntelmemoryNews & Featuresprice fixingRambusrandom accessSamsungSamsung Semiconductor

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