Three Samsung executives plead guilty in federal price-fixing case

Washington (DC) - In what may be the last, and perhaps the heaviest, shoe to drop in a US federal investigation against DRAM manufacturers accused of collusion and price-fixing, three executives from Samsung Electronics have agreed to plead guilty, pay fines of $250,000 apiece, and serve seven- to eight-month terms in US prison, the Justice Dept. announced this afternoon.

The three executives - Sun Woo Lee, senior director of DRAM sales ; Yeongho Kang, associate director of DRAM marketing ; and Young Woo Lee, sales director of Samsung’s German subsidiary - were indicted this morning in federal court in San Francisco. They were charged with conspiring with Samsung’s competitors, including Hynix Semiconductor, Elpida Memory (a joint venture between NEC and Hitachi), Micron Technology, and Infineon Technologies, to fix the prices of DRAM sold in volume to US manufacturers. Companies listed as having been affected by the scheme include Dell, Hewlett-Packard, Compaq, Apple, IBM, and Gateway. Executives from all of these other companies have plead guilty and agreed to serve jail time ; and Samsung itself has already plead guilty for its own corporate misconduct.

According to the Justice Dept., the three Samsung executives met with officials from these other DRAM manufacturers, agreed upon prices to charge their clients, issued price quotes in accordance with those agreements, and shared information with each other regarding the quantities of the orders their clients placed. Micron is believed to have been the company to have tipped off FBI investigators to the scheme, and thus has not been charged as a company.

Microsoft was not listed as a victim of this scam, although a San Jose Mercury News investigation last February pinned a shortage of available components from Infineon as one possible cause for delays in Xbox 360 manufacturing.

Perhaps in a show of goodwill, Samsung today announced the successful co-development of a semiconductor fabrication platform, along with IBM and Chartered Semiconductor, that would enable customers of all three companies to design components to a common specification, and enable any of the three to produce chips to that specification. There will probably be measures in place, one would surmise, to prevent the three producers from specifying a common price as well.