Infineon to plead guilty in memory chip case

Peter Kaplan and Daniel Sorid

WASHINGTON/SAN FRANCISCO: Germany's Infineon Technologies AG has agreed to plead guilty to charges of price-fixing and pay a $160 million fine as part of a federal investigation into the computer memory chip industry, U.S. antitrust authorities said.

Infineon became the first chip maker to plead guilty in the two-year probe, admitting to conspiring with unnamed manufacturers to fix the prices of dynamic random access memory, or DRAM, chips from 1999 to 2002, the Justice Department said.

"There were high-level employees involved," said Hewitt Pate, head of the department's antitrust division. "This was not a question of a couple of low-level, bad apples."

Pate said the conspiracy had driven up the price of chips used in products ranging from personal computers and servers to cell phones, cameras and game consoles. The fine to be paid by Infineon is the third-largest antitrust penalty ever imposed by the government, Pate said.

As part of the plea agreement, Infineon agreed to cooperate with the government's ongoing investigation. Micron Technology Inc., South Korea's Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. have acknowledged involvement in the probe.

Memory prices have swung dramatically over the years, sometimes for opaque reasons, prompting complaints of cartel-like activity. Memory chip makers have denied those allegations.

An Infineon executive said the case had been a "big distraction," and that the company was glad to put it in the past.

"We want to go back to the business of business," said Robert LeFort, president of Infineon Technologies North America.

LeFort said the fine would be paid in installments over the next five years. He said the plea agreement covers all but four of Infineon's employees.

LeFort said Infineon is also nearing an agreement with major computer manufacturers that would compensate them for any alleged overcharges. That settlement is expected to cost the company no more than $90 million, LeFort said.

In December, a Micron regional sales manager, agreed to co-operate with investigators and plead guilty to obstructing the computer-chip investigation by altering and concealing documents sought by a California federal grand jury.

The Justice Department has also sought documents from a former Samsung sales manager, who has refused to turn over any evidence.

The Justice Department said computer makers directly affected by the scheme included Dell Inc., Apple Computer Inc., International Business Machines Corp., Gateway Inc., Hewlett-Packard Co. and the company it bought, Compaq Computer Corp.

Micron spokesman David Parker said his company continues to cooperate with the Justice Department, and said Micron does not expect to be subject to fines or penalties. Samsung, in a statement, said it would also continue to cooperate with the probe.