Hynix execs to be jailed over price fixing

Michael Kanellos CNET News

Published: 02 Mar 2006 09:25 GMT

Four executives with Hynix Semiconductor in South Korea have agreed to plead guilty to price fixing and serve five to eight months in jail.

The US Department of Justice has charged four companies with attempting to fix prices in the memory market from April 1999 to June 2002. Samsung, Hynix, Elpida and Infineon have all agreed, as corporations, to plead guilty and agreed to pay more than $731m (£417m) in collective fines.

The Justice Department, however, is also prosecuting individuals. DS Kim, Hynix's general manager for worldwide sales and marketing, will serve eight months while CK Chung, Hynix's director of global strategic accounts, will serve seven months. Two other executives will serve six and five months. Each of the individuals will pay a $250,000 fine.

Micron Technology, a US memory manufacturer, has yet to be charged. But one of its former employees, Alfred Censullo, agreed to a plea bargain in 2003 in which he paid a fine and served six months of home detention.

The Department of Justice made its investigation public in 2002 following a spurt of price increases in the memory market. Before the investigation became public, Michael Dell, then-chief executive of PC market leader Dell, complained that memory makers were engaged in "cartel-like behaviour".

Ironically, the manufacturers didn't reap huge profits from the conspiracy. Though Samsung has generally turned a profit off DRAM, many companies were reporting losses during those years and sometimes even sold products for less than cost.