Risk Management

Chipmaker Charged with Price-Fixing

Foreign memory-chip supplier Hynix is charged and fined by DOJ, while executives agree to prison time in the U.S.
Stephen TaubMarch 2, 2006

Four executives of a South Korean supplier of memory chips agreed to plead guilty to price fixing and serve prison time in the United States, according to published reports, citing federal prosecutors.

The settlement with the executives of Hynix Semiconductor, the second-largest maker of computer memory chips, is the latest chapter in the Justice Department’s nearly four-year probe of Hynix and rivals Samsung of South Korea, Infineon Technologies of Germany and Elpida Memory of Japan, reported the The New York Times. The companies have been accused of conspiring to fix prices of dynamic random-access memory (DRAM) chips from April 1999 to June 2002.

Officials at the Justice Department said U.S. companies Dell Inc., Hewlett-Packard Co., and Apple Computer Inc. were among those hurt by the collusion.

The guilty pleas are yet another reassurance to U.S. companies that law enforcement officials will make strong attempts to reign in unfair business practices, even if they are committed by foreign companies and employees working for them. Altogether, nine individuals and four semiconductor companies have been charged as a result of the investigation, and total fines now exceed $731 million, reports the Times. Hynix agreed to pay a $185 million fine in 2005.

The four individuals are D.S. Kim, Hynix’s general manager for worldwide sales and marketing, who agreed to serve eight months; C.K. Chung, Hynix’s director for global strategic account sales, who will serve seven months; K.C. Suh, Hynix’s senior manager of memory product marketing, who was given a six-month term; and C.Y. Choi, a general manager for Hynix’s German subsidiary, who agreed to serve five months. Each of the executives also said they would pay a $250,000 fine, according to the Times.

Ed Swanson, a San Francisco attorney who represents Chung, told Reuters that his client still works for Hynix, but declined further comment. The wire service said lawyers for the other three individuals were not immediately available.

“Prison time for price fixers is the most potent deterrent to illegal cartel activity,” said Thomas Barnett, the assistant U.S. attorney general in charge of antitrust issues, according to the wire service.