Hynix Makes $185M DRAM Settlement with DOJ

Online staff -- Electronic News, 4/22/2005

Hynix Semiconductor Inc. confirmed late Thursday that it reached a settlement with the U.S. Department of Justice (DOJ), ending the DOJ’s investigation of Hynix as part of an industry-wide investigation on price fixing for DRAM products.

Hynix has pleaded guilty to one count of limited violation of the U.S. antitrust laws and is to pay a fine of $185 million over the next 5 years.

The Korean DRAM provider added in a statement “the settlement of the investigation was a decision to help itself manage with better transparency by getting rid of a going concern.”

Further, the reserve, which Hynix took in its 2004 financial statements in connection with this DRAM pricing investigation, is more than adequate to cover the fine, the company said.

According to a document filed by U.S. authorities in the U.S. District Court of Northern California regarding the one-count felony charged against Hynix, from about April 1, 1999, until about June 15, 2002, Hynix and its co-conspirators engaged in activities to suppress and eliminate DRAM competition by fixing the prices of DRAMs to be sold to certain OEMs.

The OEMs that were affected by the conspiracy include the likes of Dell, Compaq, Hewlett-Packard, Apple Computer, IBM and Gateway, according to the district court filing.

Hynix isn't the only DRAM player to be charged and subsequently fined in the federal government's investigation; in September of last year German DRAM supplier Infineon Technologies AG admitted its guilt and agreed to pay a $160 million fine. Then in December four Infineon executives plead guilty to participating in price-fixing.

Meanwhile, in 2003 U.S. DRAM supplier Micron Technology Inc. saw a former regional sales manager charged with obstruction of justice during the course of the DOJ's investigation. Micron later said, however, that under a Corporate Leniency Policy, it would avoid prosecution, fines or other penalties in exchange for its “full, continuing and complete cooperation in the pending (DOJ) investigation.”

Thursday's filing in U.S. district court by DOJ attorney Niall E. Lynch suggests that there may be more fines and indictments may be coming as result of the investigation. "Various corporations and individuals, not made defendants in this information, participated as coconspirators in the offense charged in this information and performed acts and made statements in furtherance of it," the filing stated.

Hynix, Infineon, Micron and essentially the rest of the major DRAM suppliers are also named in a civil lawsuit also in U.S. district court of Northern California alleging price-fixing as well. That suit, filed on behalf of number of companies involved in PC manufacturing, is asking for a trial by jury and seeks damages from the defendants.

That civil case is essentially on hold at least until July of this year, according to court filings, while the DOJ pursues its criminal price-fixing investigation.