Japanese firm pleads guilty to DRAM price fixing

Elpida Memory Inc. agreed to pay a fine of $84 million for its role in a DRAM price-fixing scheme.

Japanese DRAM (dynamic RAM) manufacturer Elpida Memory has agreed to plead guilty and pay a US$84 million fine for participating in an "international conspiracy" to fix DRAM prices, the U.S. Department of Justice (DOJ) announced Monday.

Elpida is the fourth company to agree to plead guilty in the DOJ's ongoing investigation into DRAM price fixing between April 1999 and June 2002. Four companies and five people have been charged in the case, resulting in about US$730 million in fines, the DOJ said.

A two-count felony charge filed Monday in the U.S. District Court in San Francisco, accused Elpida of conspiring with other DRAM manufacturers to fix the prices of DRAM sold to several computer and server manufacturers, including Dell, Apple Computer, Hewlett-Packard and IBM.

In addition, Elpida conspired with a DRAM manufacturer to rig a bid for a lot sold to Sun Microsystems in March 2002, the DOJ said.

Elpida carried out the price-fixing conspiracy by participating in meetings, conversations, and communications with competitors to discuss the prices of DRAM to be sold to certain customers, the DOJ said in a press release. Elpida officials agreed to the prices they would charge for DRAM during those meetings, the DOJ said.

Under the plea agreement, which must be approved by the court, Elpida has agreed to cooperate with the government in its ongoing investigation of other DRAM producers. The DOJ will also enter into cooperation agreements with Elpida's corporate predecessors, NEC and Hitachi. The two companies established Elpida as a joint venture in November 1999, and Hitachi and NEC remain the Elpida's largest stockholders.

Elpida, in a press release, said its portion of the fine, US$9.5 million, will not change its financial forecast issued Jan. 24. The company has enough fixed reserve to cover its portion of the fine, it said. The fine includes sales activities by Hitachi and NEC before the joint venture, Elpida said.

Elpida's fine is the smallest levied against the four DRAM companies. In November 2005, Korean manufacturer Samsung Semiconductor and its parent company Samsung Electronics pleaded guilty and were sentenced to pay a US$300 million criminal fine.

In October 2004, German manufacturer Infineon Technologies pleaded guilty and was sentenced to pay a US$160 million criminal fine, and in May 2005, Korean manufacturer Hynix Semiconductor pleaded guilty and was sentenced to pay a US$185 million criminal fine.

DRAM is the most commonly used semiconductor memory product, providing high-speed storage and retrieval of electronic information for computers, telecommunication equipment, and consumer electronic devices. DRAM is used in personal computers, laptops, servers, printers, mobile phones, telecommunication hubs and routers, digital cameras, digital music players and other devices.

About US$7.7 billion worth of DRAM was sold in the U.S. in 2004, the DOJ said. Elpida is the world's fifth-largest DRAM manufacturer, according to the DOJ.

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