The company and its US subsidiary Samsung Semiconductor Inc admit to conspiring with rivals to set prices of dynamic random access memory, or DRAM, sold to certain computer and server makers, from April 1999 to June 2002.
The plea agreement, which will go before the US District Court in San Francisco for approval during the next couple of months, leaves room for separate criminal charges against seven unidentified Samsung executives.
Dell, Compaq Computer, Hewlett-Packard, Apple Computer, IBM and Gateway were directly affected by the conspiracy and are entitled to seek damages in civil court, said the US Department of Justice Antitrust Division.
HP and Samsung have already agreed to a settlement on the matter, said a HP spokesperson. The terms of the settlement, including its timing, were undisclosed.
Dell declined to comment on the case and the remaining computer makers did not return repeated calls for comment.
Because the DoJ-FBI investigation is mid-stream, estimated damages have not yet been released. The conspiracy drove up DRAM chip prices. In 2004, US DRAM sales reached $7.7bn.
A large number of class-action cases are already filed against Samsung and are currently consolidated before California’s federal court, as well as additional cases in state court, said Phillip Warren, chief of the San Francisco office of the DoJ Antitrust Division.
While Warren said he was not aware of governments elsewhere having filed charges against the DRAM conspirators, the possibility seems likely. After all, the US charges involve actions on several continents.
Given the size of this industry, it’s reasonable to expect that if there were antitrust violations in other jurisdictions that those enforcement agencies would take action, Warren said.
South Korean-based Samsung, which operates in 48 countries, is the third chipmaker to plead guilty in the wide-reaching conspiracy. Germany’s Infineon Technologies AG, Hynix Semiconductor Inc, also of South Korea, and Micron Technology Inc in the US also have admitted to playing a role in the conspiracy, as well as five individuals.
Other entities are being investigated, Warren said, but because the government’s sweeping probe is ongoing he said he was not permitted to name them.
Fines resulting from the investigation so far total more than $646m, he said.
Samsung issued a terse statement saying a resolution of the matter has been paramount to the company. The company, which last year netted a $10.3bn profit, said the settlement would not affect its ability to meet existing or future obligations.
It did not comment on the seven company executives that were not part of the plea deal and may face criminal charges for their roles in the conspiracy. The executives’ identity and current status with Samsung are not known.
Samsung’s guilty plea to the felony charge detailed how it would meet with other DRAM makers to agree on prices to charge their heavyweight customers in the US and elsewhere. The companies also exchanged information on DRAM sales on to ensure they had each adhered to the agreed-upon prices.
Samsung’s fine is almost double that of some of its co-conspirators. Hynix was fined $185m in May, while Infineon was fined $160 last October. Four Infineon executives and a Micron regional sales manager also have been served prison terms, ranging from four to six months, as well as fines of no more than $250,000.
The DoJ’s Warren said because the investigation is ongoing he could not elaborate on how it started. He offered three typical possibilities: customers report their suspicions; DoJ staff uncovers information; or guilty companies approach the DoJ seeking corporate amnesty for their role in the conspiracy.
The DoJ only offers one amnesty per case and that company only receives full non-prosecution protection if they meet the terms of the program, Warren said.
In November, Micron issued a statement in which it said it was part of the DoJ’s corporate leniency policy and would not be subject to prosecution, fines or other penalties. But Warren said it should not be assumed one way or another that Micron was the impetus for the investigation.
This investigation began in 2002, one year after DRAM prices began to rise in contrast to the broader tech industry’s severe downturn. At the time, Dell’s then-CEO Michael Dell blamed the high prices on cartel-like behavior by chipmakers.
The only other company to have been fined more than Samsung in the US was Hoffmann-La Roche Ltd, a Swiss health-product maker that agreed to pay $500m in 1999 for fixing vitamin prices.