Memory cartel fined

Probably a desperate attempt by some to survive since mem prices had
nosedived , while others who were buying up the downbeaten firms was
probably trying to make a killing.

That probably explains the sudden firming up of mem prices the last
few years and maybe the bit of softness again in recent months since
the investigation had been going on for a while.

Also Ive read the raging inflation in China - stories about shortages
of electrcity and steel etc developing seem to be gone now that they
tighened up credit which cooled off the economy. That may explain or
maybe not --- the sudden reappearance of freebies and big discounts at
some retail stores the last month but thats proably also due to the
fact back to school sales are over now which tend to be fake, And the
fact the economy in the US is now getting mixed reviews again - up or
flat? Part of that is the oil scares , persistently high oil prices
though many predicted it would go down after labor /summer - the
traveling/vacation season ---- they are now claiming the Florida
hurricanes are putting a scare into possible damage in refining
capacity or something. Opec just announced they would boost output
though. Also the cooling down of the Chinese economy also means less
US exports ---- there was an article about how American GM car sales
went off a cliff in china after they tightened credit there , in an
article in the NY times.




Infineon to Pay a Fine in the Fixing of Chip Prices
By STEPHEN LABATON

Infineon Technologies AG

ASHINGTON, Sept. 15 - Federal prosecutors announced on Wednesday that
they had cracked a global cartel that had illegally fixed prices of
memory chips in personal computers and servers for three years, and
that one of the companies involved, Infineon Technologies, had agreed
to plead guilty to one criminal count and pay a fine of $160 million.

At a news conference announcing the plea agreement, R. Hewitt Pate,
the assistant attorney general in charge of the antitrust division at
the Justice Department, said Infineon had participated in a series of
discussions in the United States and elsewhere from July 1999 through
June 2002 to set prices of memory equipment, known as dynamic random
access memory, or DRAM. Such chips are used in an array of consumer
and industrial products, including cellphones, hand-held organizers,
digital cameras, television sets, games and MP3 music players. The
American market for the memory equipment is about $5 billion a year.

Complaints by computer makers of possible collusion in the memory
equipment market led to the investigation. The computer makers that
were hurt by the collusion, the government said, included Dell,
Compaq, Hewlett-Packard, Apple, I.B.M. and Gateway. Officials said
that in some instances, the computer makers passed the price increases
on to consumers, and in other instances, they responded by limiting
the amount memory in their computers.

"Today's charge and its resulting guilty plea represent an important
victory in the department's ongoing fight to break up and prosecute
cartels that harm American consumers," Mr. Pate said.

Mr. Pate emphasized that the investigation was continuing but declined
to identify the other companies, which he called co-conspirators. He
would not say how much the cartel had cost consumers and computer
makers, but noted that the memory chip was among the most expensive
components of computers.

A related class-action lawsuit filed by the computer makers identifies
the cartel's other participants as including Micron Technology,
Samsung, Hynix and Nanya Technologies.

Mr. Pate said that the scheme was conducted with the approval of top
executives of Infineon.

"There were high-level employees involved," he said. "This was not a
question of a couple of low-level bad apples." He said the plea
agreement offered immunity to some executives and not others, but
declined to elaborate.

Last December, the Justice Department accused Alfred P. Censullo, a
regional sales manager for Micron, with obstruction of justice in
connection with the inquiry. Mr. Censullo has since pled guilty and
acknowledged that he withheld and altered documents that were relevant
to a grand jury subpoena served on Micron in June 2002. Mr. Censullo
has not yet been sentenced.

In the criminal case announced on Wednesday, which was filed in
Federal District Court in San Francisco, the government accused
Infineon of violating Section 1 of the Sherman Antitrust Act by fixing
prices through a series of "meetings, conversations and communications
in the United States and elsewhere."

Infineon, with headquarters in Munich, Germany, issued a statement
Wednesday afternoon saying that it accepted responsibility for its
role in the cartel and that it would pay the fine over the next five
years.

"Accepting responsibility for mistakes made by certain employees and
resolving this matter is in the best interest of our shareholders, our
employees and our customers," a company spokesman, Guenter Gaugler,
said.

The $160 million penalty is the third-largest criminal fine under the
Sherman Act and the biggest one under Attorney General John Ashcroft.
(The two larger fines were levied in 1999 on two vitamin makers: $500
million against Hoffmann-La Roche and $225 million against BASF.)

The plea could have an impact on a case brought by Rambus to collect
royalty payments against the memory chip makers.

In a patent infringement suit set to begin in three weeks, Rambus has
accused Infineon and other rivals of conspiring to take its technology
and drive it out of the market.

Christoph Liedtke, a spokesman for Infineon Technologies North America
said that the criminal case and the Rambus patent case were unrelated.
After the announcement of the plea agreement, shares of Rambus jumped
10.2 percent to close at $15.32, up $1.43.