News and New Products

Micron, Infineon Subpoenaed in Antitrust Investigation

By Alex Romanelli, Electronic News Online -- Electronic News, 6/19/2002

In a move that has surprised DRAM analysts, the antitrust division of the U.S. Department of Justice has undertaken an industry-wide investigation into alleged anticompetitive practices among DRAM manufacturers.

Both Micron Technology Inc. and Infineon Technologies have confirmed they received grand jury subpoenas from the U.S. District Court for the Northern District of California.

Bloomberg is reporting that the U.S.-based operations of the world’s largest DRAM manufacturer, Samsung Electronics Co. Ltd., has also been subpoenaed. When contacted by Electronic News Online, Samsung refused to comment.

"I have a lot of trouble with this," said Sherry Garber, principal analyst with Semico Research Corp. "It doesn’t make any sense to me if the charge is that the companies all got together and set DRAM prices. Knowing these three companies, they are so competitve against each other, they barely agree on anything.

"DRAM prices went up in November, December, January because there was actually a shortage in DDR SDRAM. There was an increase in demand from the PCs as they built all the P4s with DDR SDRAM. When that build was done, prices went down again," Garber said.

According to Matt Godfrey, DRAM analyst at Semico, this price spike publicly angered Michael Dell, chairman of No. 1 PC maker Dell Computer Corp. That company would have the power to urge the Department of Justice to begin such an investigation, he said. Subsequently, Dell reportedly proclaimed his decision to give no new business to the top three DRAM manufacturers and last week Dell announced a $3 billion, five-year supply deal with Nanya Technology Inc. for DRAM chips.

"I do not want to lay it all at their [Dell’s] feet," Godfrey said. "But considering they are switching most of their purchasing over to Nanya, that kind of spells it out right there. He [Michael Dell] did say that the top three guys are in some type of collusion and switches over to Nanya, and suddenly a government investigation pops up, it seems that pressure was exuded by somebody. If you are No. 1 in any industry the government will listen to you.

"You have reverse collusion in the sense everyone has agreed to stop flooding the spot market with inventory in order to short ASPs. Looking at it from Dell’s perspective, I definitely can see why they think collusion was going on. But if you look at it when times were good everybody raised their prices and when times were bad everybody tried to stop flooding it with inventory in order to short prices. I don’t think anybody colluded in either case, I think its just a matter of everybody just did what they felt they needed to and everybody had pretty much the same idea. It’s a cyclical industry," Godfrey said.

Micron and Infineon said they would cooperate with the department's investigation.

"Micron does not believe it has violated U.S. antitrust laws," said Kipp Bedard, Micron’s VP of corporate affairs, in a statement. "The DRAM business is highly competitive and subject to extreme volatility. Competitive forces in today's market have led to DRAM prices reaching unprecedented lows."

It is unknown if No. 3 memory maker Hynix Semiconductor Inc. is also under investigation. The company could not be reached for comment.