Four Hynix executives plead guilty to DRAM price fixing

Four Hynix executives have agreed to plead guilty in a US federal DRAM price-fixing investigation.

Four South Korean executives from Hynix Semiconductor have agreed to plead guilty for their role in fixing prices of DRAM (dynamic RAM), agreeing to serve about one-half year in U.S. prison and pay a US$250,000 fine each.

This deal results from a long investigation of a global conspiracy, according to a statement Wednesday from the U.S. Department of Justice.

Including news of the guilty pleas, the federal investigation has now hit four companies and nine individuals with criminal charges, and fined them US$731 million.

Computer designers use DRAM semiconductors to provide high-speed data storage in everything from desktop PCs and laptops to peripherals like printers and modems, and consumer electronics like mobile phones and digital cameras.

It adds up to an enormous market; DRAM sales totaled US$7.7 billion in the U.S. in 2004, according to Justice Department figures.

The charges state that the four Hynix employees conspired with unnamed employees from other memory makers to fix the prices of DRAM sold to certain U.S. computer and server manufacturers, during the period from April 1, 1999 to June 15, 2002.

The conspiracy directly affected sales to U.S. computer makers Dell, Hewlett-Packard, Compaq Computer, IBM, Apple Computer, and Gateway.

The four Hynix individuals (and their jail terms) are:

  • D.S. Kim, Hynix's general manager for worldwide sales and marketing, eight months;
  • C.K. Chung, Hynix's director of global strategic account sales, seven months;
  • K.C. Suh, Hynix's senior manager of memory product marketing, six months; and
  • C.Y. Choi, general manager of marketing and sales support for Hynix's German subsidiary, five months.

Each executive has also agreed to pay a US$250,000 fine and to cooperate in the Antitrust Division's ongoing investigation of the DRAM industry.

They have all agreed not to contest U.S. jurisdiction or fight extradition. The pleas and sentences are subject to the approval of the U.S. District Court in San Francisco.

"We strive to preserve the integrity of our free market economy," said Attorney General Alberto R. Gonzales in the statement. "Individuals who defraud American businesses and consumers by participating in international price-fixing conspiracies will be prosecuted and sent to prison no matter where they live or where they commit the crime."

The Hynix executives are the second wave of individuals to agree to prison sentences in the DRAM investigation. In December 2004, four Infineon executives pleaded guilty to the DRAM price-fixing conspiracy, and agreed to similar punishment, serving jail terms from four to six months and each paying a $250,000 fine.

Also, in December 2003 the DOJ charged one executive at Micron Technology, with obstruction of justice. He was sentenced to serve six months of home detention.

In total, four companies have pleaded guilty to price-fixing charges in the DRAM investigation.

Samsung Electronics Co., the world's largest DRAM manufacturer, was ordered in November 2005 to pay a US$300 million criminal fine. Hynix, the world's second-largest DRAM manufacturer, was ordered in May 2005 to pay US$185 million. Elpida Memory of Japan agreed in January 2006 to pay US$84 million. And Infineon of Germany agreed in October 2004 to pay US$160 million.

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