Samsung Exec Pleads Guilty in DRAM Case

An executive at Samsung Electronics, the world’s largest manufacturer of DRAM (dynamic RAM), has agreed to plead guilty and serve jail time for participating in a global price-fixing conspiracy, the U.S. Department of Justice (DOJ) said Thursday.

The DOJ said Thomas Quinn participated in a price-fixing conspiracy in his position as vice president of marketing for memory products at Samsung Semiconductor, Samsung’s U.S. subsidiary. The DOJ charged Quinn with violating the U.S. Sherman Act, which lays out antimonopoly regulations. The DOJ alleged that he helped engineer an agreement to fix DRAM prices and to coordinate bids in a Dec. 5, 2001 Sun Microsystems auction.

Under the plea agreement, which must be approved by the U.S. District Court in San Francisco, Quinn has agreed to serve an eight-month prison sentence and pay a US$250,000 fine.

In addition, Quinn has agreed to assist the DOJ in its ongoing investigation, which it is pursuing in conjunction with the U.S. Federal Bureau of Investigation (FBI).

“We are still very actively investigating antitrust violations in the DRAM industry,” the DOJ’s Antitrust Division director of criminal enforcement, Scott Hammond, said in a statement.

DRAM is the most commonly used semiconductor memory product. The alleged price fixing harmed computer makers, by making manufacturers such as Apple Computer, Dell and Hewlett-Packard pay more for DRAM than they otherwise would have, the DOJ said. The costs were then passed on to consumers, it pointed out.

In March, three other Samsung executives agreed to a similar plea deal. Sun Woo Lee, Samsung’s senior manager of DRAM sales, agreed to a sentence of eight months in U.S. prison. Yeongho Kang, associate director of DRAM Marketing for Samsung’s U.S. subsidiary, and Young Woo Lee, sales director for Samsung’s German subsidiary, both agreed to serve seven months. The three also agreed to each pay a $250,000 fine.

With Thursday’s plea agreement, four companies and 13 individuals have been charged and fines totaling more than $731 million have resulted from the DOJ’s investigation. Among other related plea deals and charges, Samsung was ordered in November 2005 to pay a $300 million fine. Hynix was ordered in May 2005 to pay $185 million. Elpida Memory agreed in January to pay $84 million. And Infineon agreed in October 2004 to pay $160 million.

In addition to the DOJ case, similar investigations and charges are being pursued on the state level. Samsung faces charges in a price-fixing lawsuit filed in Manhattan by New York Attorney General Eliot Spitzer, working with other states.

And in July, 34 states filed a joint antitrust lawsuit against seven DRAM makers over price fixing. That lawsuit did not include Samsung, but did include Micron Technology; Infineon Technologies; Hynix Semiconductor; Elpida Memory; NEC Electronics America; Mosel Vitelic and Nanya Technology.

-Marc Ferranti, IDG News Service (New York Bureau)

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