Hynix to pay $185 million DRAM price-fixing fine

Hynix agrees to plead guilty to DRAM price fixing and pay a $185M fine, the third-largest criminal antitrust fine in US history.

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

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

Hynix's fine follows a US$160 million fine paid by German DRAM maker Infineon Technologies in September 2004. Infineon agreed then to cooperate in the DOJ'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, said Scott Hammond, deputy assistant attorney general for criminal enforcement in the DOJ's Antitrust Division.

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

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

Hammond declined to talk about other pending charges, but said the DOJ investigation is ongoing.

The DOJ 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 US$250,000. In December 2003, the DOJ 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 DOJ press conference.

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