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October 19, 2006 8:47 am

Samsung and Hynix executives indicted

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Executives of Samsung Electronics and Hynix Semiconductor were indicted by the US on Wednesday on charges of price-fixing in the memory chip business, as part of the long-running anti-trust investigation by the US justice department.

The indictment, filed by the US District Court in San Francisco, charged that Kim Il-ung and Rha Young-bae at Samsung and Gary Swanson at Hynix participated in a global conspiracy between April 2001 and June 2002 to fix prices of D-ram chips used in personal computers and other electronics devices.

The US move came as the world’s top memory-chip makers reported strong earnings from higher prices of D-rams, with demand for higher-density memory chips rising substantially with wider applications for PCs, electronics games and other mobile digital devices.

Samsung, the world’s biggest memory-chip maker, forecast on Thursday that its 2006 sales of D-ram chips would rise by 25 per cent to $10bn. It aims to increase its share of the global D-ram market from 32 per cent this year to 36-40 per cent next year as the market is expected to grow about 17 per cent to $35bn in 2007.

Wednesday’s indictment was part of the DoJ’s wide-ranging probe into the massive international conspiracy to fix D-ram prices. The scandal has ensnared four companies and 13 individuals and resulted in $731m in fines, the second-largest criminal antitrust fine in history.

Samsung pleaded guilty last year and paid a $300m fine for its role in the conspiracy and Hynix paid $185m in 2004 while Germany’s Infineon Technologies paid $160m in fines in 2003.

The DoJ said the international conspiracy was hatched during conversations and electronics correspondence among individuals who discussed charging certain prices for D-rams for specific customers, and exchanging information on D-ram sales to customers. In some cases, they conspired to rig an online auction.

At the time of the conspiracy, Mr Kim and Mr Rha were vice presidents of sales and marketing for Samsung’s memory division, while Mr Swanson was senior vice president of memory sales and marketing for Hynix’s US subsidiary.

If convicted, the three men could face up to three years in prison and a $350,000 fine. The fines may be increased to double the amount of money gained from the conspiracy or double the loss suffered by the victims, if either of those amounts is bigger than the maximum fine of $350,000.

Earlier this year, four other executives at both Samsung and Hynix pleaded guilty to the price-fixing charges and agreed to serve prison terms ranging from five to eight months and to each pay a $250,000 fine.

In 2004, four executives of Infineon pleaded guilty to the conspiracy and got similar sentences and another executive from Micron Technology was sentenced to six months of home detention for obstruction of justice in connection with the matter.

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