Samsung became the latest chip company that has executives heading to jail, after three senior-level employees pleaded guilty to a wide-ranging price-fixing conspiracy in the computer memory market. According to an announcement by the U.S. Department of Justice on Wednesday, the three executives participated in a global conspiracy to fix the price of DRAM memory chips used in personal computers. The three Samsung executives -- a senior manager of DRAM sales, the associate director of DRAM marketing in the U.S. and the sales director of the company's German subsidiary -- will serve jail sentences ranging from seven months to eight months. South Korea's Samsung, the world's largest maker of DRAM memory chips, had already agreed to pay a $300 million fine in 2005 in connection with the investigation. In a statement regarding Wednesday's guilty pleas, Samsung cited its previous settlement with the DOJ and said that the company forbids anticompetitive behavior and is strongly committed to fair competition and ethical practices. According to the DOJ, the Samsung executives colluded with unnamed employees at other companies to set DRAM prices between 1999 and 2002. The actions directly affected sales to U.S. computer makers Dell ( DELL), Hewlett-Packard ( HPQ) and Apple Computer ( AAPL), among others. "These are the first executives from Samsung to plead guilty to fixing prices in what is still an active investigation into antitrust violations in the DRAM industry," said a statement by Thomas Barnett, assistant attorney general in the DOJ's antitrust division. "We will continue our efforts to bring to justice other domestic and foreign-based executives who were involved with fixing DRAM prices," Barnett said.
Earlier this month, four executives of South Korea's Hynix Semiconductor pleaded guilty to similar charges, resulting in fines and jail terms of between five months to eight months. Four executives from Germany's Infineon Technologies ( IFX) have already served jail terms after pleading guilty to price-fixing in December 2004. A regional sales manager at Micron Technology ( MU) pleaded guilty to obstruction of justice in connection with the DRAM investigation in 2003, serving six months of home detention.
According to the DOJ, four companies and 12 individuals have been charged in the price-fixing case, resulting in more than $731 million in fines -- the second-largest amount of fines the department has ever collected from a single price-fixing conspiracy. Each Samsung executive will also pay a $250,000 fine and cooperate with the DOJ's ongoing investigation of the DRAM industry under the terms of the agreements, which are subject to the approval of the U.S. District Court in San Francisco. The executives have agreed not to contest the jurisdiction of the U.S., making extradition unnecessary.