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Sixth Samsung exec headed for jail for DRAM price-fixing

-April 20, 2007

In the latest proceedings on the DRAM price-fixing conspiracy, the United States Department of Justice (DOJ) Thursday announced that a sixth executive from Samsung Electronics Co. Ltd. has agreed to plead guilty to his participation in a global conspiracy to fix DRAM prices.

Il Ung Kim, a South Korean executive, has agreed to serve 14 months in a United States prison, in what the DOJ said was the longest imprisonment ever by a foreign defendant charged with price fixing in the United States.

Kim, VP of marketing for the memory division at Samsung, agreed to plead guilty to a single count of price fixing. As part of his plea agreement, Kim will pay a $250,000 criminal fine and assist prosecutors in the ongoing investigation.

Kim agreed to plead guilty to the charge contained in an indictment filed in U.S. District Court in San Francisco in October 2006. He was charged with participating in a conspiracy to suppress and eliminate competition by fixing the prices of DRAM to be sold to certain original equipment manufacturers (OEM) of personal computers and servers, in violation of the Sherman Antitrust Act.

The entry of the plea agreement and sentencing is currently scheduled for April 25. The plea and recommended sentence must be approved by the court, the DOJ said.

Kim is not alone in his newfound criminal status. Of the 18 individuals that have been charged in the DRAM investigation, 15 have been convicted, the DOJ said. Kim is the first of three defendants charged in the October 2006 indictment to plead guilty. A trial against Kim's co-defendant Gary Swanson, senior VP of memory sales and marketing for Hynix Semiconductor America Inc., is scheduled for September 10. A third defendant charged in the October 2006 indictment, Young Bae Rha, a Korean national and the VP of sales and marketing for Samsung's memory division, remains at large, the DOJ said.

To date, the court has imposed criminal fines totaling more than $730 million against the DRAM cartel members, which the DOJ said is the second-largest total amount of fines ever imposed in a U.S. criminal antitrust investigation. A total of 18 individuals and four companies have been charged as a result of the DOJ's ongoing antitrust investigation into the DRAM industry.

According to the plea agreement filed Thursday in federal court in San Francisco, Kim participated in a conspiracy among certain DRAM producers and their officers and employees in the United States and elsewhere to raise and stabilize the price of DRAM sold to certain OEMs from on or about April 1, 2001, to on or about June 15, 2002. The violation directly affected sales to U.S. computer makers Dell Inc., Hewlett-Packard Co., Compaq Computer Corp., IBM Corp., Apple Inc. and Gateway Inc. 
    
In November 2005, Samsung pleaded guilty to participating in the price-fixing conspiracy and was sentenced to pay a $300 million criminal fine in November 2005. Then Hynix Semiconductor Inc.pleaded guilty and was ordered to pay a $185 million criminal fine in May 2005. In October 2004, Germany-based Infineon Technologies AG  pleaded guilty and was sentenced to pay a $160 million criminal fine. In January 2006, Japan-based manufacturer Elpida Memorypleaded guilty and was ordered to pay an $84 million fine.

Kim is the sixth Samsung executive to agree to plead guilty and agree to a prison sentence in the DRAM investigation. In April 2006, Sun Woo Lee and Yeongho Kang pleaded guilty to participating in the price-fixing conspiracy while they worked for Samsung or its subsidiaries in the U.S. In August 2006, Young Woo Lee pleaded guilty to participating in the price-fixing conspiracy while he worked for Samsung or its subsidiaries in Europe. In September 2006, Thomas Quinn, a San Jose-based executive, agreed to plea guilty to participating in the price-fixing conspiracy in his capacity as VP of marketing for memory products at Samsung. Then, in December 2006, Young Hwan Park, president of Samsung Semiconductor and a former VP of sales for Samsung, pleaded guilty to participating in the price- fixing conspiracy. The Samsung executives were sentenced to serve prison sentences ranging between seven and 10 months and paid criminal fines of $250,000 each.

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