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DoJ Casts Wider Net in DRAM Investigation

By Alex Romanelli, Electronic News Online -- Electronic News, 6/20/2002

The U.S. Department of Justice is casting a wider net in its antitrust investigation of DRAM manufacturers, with the top five DRAM manufacturers all becoming part of the broad investigation.

The U.S subsidiaries of Hynix Semiconductor Inc., Elpida Memory Inc., Nanya Technology Corp. and Winbond Electronics Corp. are the latest companies to receive subpoenas from the U.S. District Court for the Northern District of California. They join the U.S. subsidiaries of Samsung and Infineon, Samsung Semiconductor Inc. and Infineon Technologies North America Corp. Micron Technology Inc., the sole U.S.-based DRAM manufacturer being investigated, received a subpoena Monday.

The companies subpoenaed each said they have denied any wrong-doing and intend to cooperate fully with the investigation.

The Department of Justice is undertaking an industry-wide investigation into alleged anticompetitive practices among DRAM manufacturers. DRAM prices spiked at the start of the year, coinciding with an increase in demand for double data rate (DDR) SDRAM from PC manufacturers who required the memory for use with Intel Corp.'s Pentium 4 processors.

"From an outside perspective you look at it and think it looks like collusion," said Matt Godfrey, DRAM analyst for Semico Research Corp. "You get a little deeper and it’s just the way everybody does business … It’s a fundamental marketing principle. You price your product at what the market will bear."

Demand and prices have since subsided in the volatile DRAM market, causing the investigation to be something of a surprise and shock to industry analysts.

"We have to accept the DRAM market is a very competitive market," said Farhad Tabrizi, Hynix’s VP of marketing. "If you look at the price for 128Mbit DRAM, in the last year or so it has varied from $1 to $5. The total DRAM industry has come down from $45 billion in 1995 to $12 billion in 2001. It is very difficult to assume DRAM companies were trying to control the market. If they’ve done it, they should have done a better job."