U.S. government approaches $1-billion USD in fines from DRAM companies

In a settlement, Samsung agreed today to pay $90 million USD for participating in illegal DRAM price-fixing practices. Samsung and several other major DRAM companies were all caught up in bitter court ordeals involving business conspiracies that affected the bottom line for several major OEMs and system integrators. Originally Samsung was excluded from the list of manufacturers that faced lawsuits:
  • Elpida Memory (Japan)
  • Hynix Semiconductor (South Korea)
  • Infineon Technologies AG (Germany)
  • Micron Technology (USA)
  • Mosel Vitelic (Taiwan)
  • Nanya Technology Corp. (Taiwan)
  • NEC Electronics America (USA)
Despite being last to be on the list, there seems to be no escape for all the major DRAM companies. For all of 2006, Samsung was under heavy investigation, all while the fines were accumulating. In fact, the U.S. government fined a total of $731 million USD in 2006 for DRAM price-fixing. The price fixing scheme caused major OEMs to pay higher than normal prices for memory and those costs were then passed on to customers. Had all the major DRAM companies actually remained competitive, DRAM prices would have been lower.

Of the $90 million USD that Samsung must pay, $80 million of it will be returned back to those affected by the schemes, while the balance will be distributed among local and state government bodies. For Samsung, the new fine will be something familiar to the company.

In 2005, Samsung was ordered by the U.S. Department of Justice to pay roughly $300 million USD in a separate case.

Most of the above companies have not just faced the U.S. government in court, but also Rambus for patent infringement cases -- not coincidentally Rambus provided much of the key evidence against these DRAM manufacturers in this and other DRAM antitrust cases.

Late last year, Micron had claimed Rambus was not playing fair in the DRAM market and filed a suit against Rambus for abusive business practices. Interestingly, in August of last year, the FTC also claimed that Rambus unfairly monopolized the DRAM market. The FTC decided yesterday to heavily slash the royalties on certain DRAM that Rambus makes its licensees pay.

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