Samsung Electronics, the world's largest maker of memory chips, pleaded guilty Wednesday to a charge it participated in a price-fixing conspiracy...
SAN FRANCISCO — Samsung Electronics, the world’s largest maker of memory chips, pleaded guilty Wednesday to a charge it participated in a price-fixing conspiracy that damaged competitors and increased computer prices.
In accordance with an October plea deal with federal prosecutors, U.S. District Judge Phyllis Hamilton ordered the Korea-based company and its U.S. subsidiary, Samsung Semiconductor, to pay a $300 million fine — the second-largest criminal antitrust fine ever.
The hearing in San Francisco federal court was the culmination of a massive, three-year investigation that has netted guilty pleas from three of the largest makers of dynamic random access memory chips (DRAM) used to store information in computers and other devices.
Earlier this year, Seoul, Korea-based Hynix Semiconductor agreed to pay a $185 million fine while rival Infineon Technologies of Germany agreed to pay $160 million last year. A fourth chip maker, Boise, Idaho-based Micron Technology, has been cooperating with prosecutors and was not expected to face charges.
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The government claimed the companies conspired in e-mails, telephone calls and face-to-face meetings to fix prices of memory chips, which are used in personal computers, printers, video recorders and many other electronics.
On Wednesday, Samsung Semiconductor’s chief financial officer, Dahm Huh, spoke on behalf of the company and answered a series of routine questions about the defendant’s ability to pay, the company’s understanding of the deal and the waiving of various rights.
Huh answered “yes” or “no” to the questions but offered no elaboration and did not speak to reporters after the hearing. Company spokeswoman Chris Goodhart also declined to comment afterward.
The plea deal, which was announced in October, requires the company to pay $300 million, plus interest, in installments over the next five years. The government agreed to not pursue additional prosecutions against Samsung or most its officers and employees.
Seven people, including Samsung Semiconductor President Y.H. Park, are specifically excluded from such protection and could face prosecution.
The others are Tom Quinn, senior vice president of sales and marketing for memory products; marketing vice presidents Kim Il-ung and Kang Yeong-ho, and memory-chip sales vice presidents Lee Sun-woo and Lee Young-woo. The seventh, Rha Young-bae, is no longer with Samsung.
Niall Lynch, a Justice Department antitrust attorney, declined to comment on the status of the seven people who were “carved out” of the deal. He said the investigation is continuing to look at other companies and people.
He did note that the government will now have Samsung’s assistance in its investigation.
The deal also did not seek restitution from Samsung. Instead, victims — ranging from other chip makers and computer makers to private individuals — can sue for damages.
“We’re letting that be the vehicle for victim compensation,” Lynch said outside the courtroom.
Victims, according to federal prosecutors, included Dell, Compaq, Hewlett-Packard, Apple, IBM and Gateway.
Apple and Dell raised PC prices to compensate while others reduced the amount of memory installed on their systems to compensate, the government claimed.
The Justice Department investigation began in 2002, a year after memory-chip prices began to climb even though the rest of the tech industry was suffering its worst downturn in history.
At the time, then-Dell CEO Michael Dell blamed the high prices on cartel-like behavior.