Samsung Exec to Serve 10 Months for DRAM Price-Fixing Scheme
{{#rendered}} {{/rendered}}A Samsung Electronics Co. executive agreed to plead guilty and serve 10 months in prison for his role in a global price-fixing scheme involving a common form of computer memory, federal prosecutors said Thursday.
Young Hwan Park, president of Samsung Semiconductor Inc., the company's San Jose-based U.S. subsidiary, is the fifth Samsung executive this year to agree to a prison sentence over price manipulation of dynamic random access memory, or DRAM, the most common type of memory chip used in personal computers.
A Samsung spokeswoman said Thursday that Park is still with the company but declined to discuss the company's future plans.
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"Samsung is strongly committed to fair competition and ethical practices and forbids anticompetitive behavior," spokeswoman Chris Goodhart said in a statement.
In total, four memory chip companies and 18 people have been charged in the Justice Department's investigation of DRAM makers.
{{#rendered}} {{/rendered}}Samsung, Elpida Memory Inc., Infineon Technologies AG (IFX) and Hynix Semiconductor Inc. have all pleaded guilty for roles in the scheme and were ordered to pay about $729 million in fines. The fine for Samsung and its subsidiary totaled $300 million.
Fifteen people charged in the case have now pleaded guilty, including the five Samsung executives, four executives each from Infineon and Hynix, an executive from Elpida and a sales manager from Micron Technology Inc. (MU)
Park's prison sentence would be the longest levied against any of the defendants.
{{#rendered}} {{/rendered}}The Justice Department said collusion among the world's DRAM makers began in 1996, when manufacturing ramped up but prices failed to drop as expected.
Investigators said DRAM executives hatched a covert plan to keep prices artificially high and colluded in the United States and abroad.
The charge against Park and his expected guilty plea, which still needs court approval, were filed simultaneously Thursday in San Francisco federal court. Park also agreed to pay a $250,000 fine. A court date for Park to enter the plea had not been set.
{{#rendered}} {{/rendered}}"This latest plea underscores our resolve to hold responsible those who target U.S. businesses and consumers with price-fixing schemes," Thomas O. Barnett, the assistant attorney general in charge of Justice Department's antitrust division, said in a statement. "Individuals who choose to engage in price fixing are on notice of the consequences of their illegal actions criminal fines and prison time."
Park is accused of conspiring with employees from other memory chip makers from April 2001 to June 2002 to keep the prices of chips artificially high. He was vice president of sales for Samsung Electronics at the time.
Prosecutors say the scheme affected sales to computer makers Apple Computer Inc. (AAPL), Compaq Computer Corp., Dell Inc. (DELL), Gateway Inc. (GTW), Hewlett-Packard Co. (HPQ) and IBM Corp. (IBM)
{{#rendered}} {{/rendered}}The indictment alleges Park struck deals with other executives in secret meetings about the prices charged to certain manufacturers. The executives allegedly swapped data on DRAM shipments to those manufacturers to make sure everyone was selling at agreed-upon prices.
The probe of anticompetitive practices in the semiconductor industry has since expanded to the sale of graphics processors and cards, and another form of memory known as static random access memory, or SRAM.
At least five SRAM makers have said they were contacted by Justice Department investigators as part of the industrywide probe, including Sony Corp. (SNE), San Jose-based Cypress Semiconductor Corp. (CY), and the U.S. units of Mitsubishi Electric Corp., Samsung Electronics Co. and Toshiba Corp.
{{#rendered}} {{/rendered}}SRAM chips are faster and more reliable than DRAM chips, but are also more expensive and found in far smaller quantities in PCs.
Worldwide SRAM sales totaled $2.8 billion in 2005, compared with DRAM sales the same year of about $24.8 billion, according to market researcher iSuppli Corp.
Two leading graphics chip companies — Advanced Micro Devices Inc. (AMD) and Nvidia Corp. (NVDA) — have said they were subpoenaed by federal investigators probing possible anticompetitive practices among makers of computer graphics chips.
{{#rendered}} {{/rendered}}The Justice Department has declined to discuss details of the graphics chips and SRAM probes.