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Micron, Samsung called in chip probe

The semiconductor companies say they have received subpoenas seeking information for an industrywide U.S. probe into alleged anticompetitive practices among DRAM chipmakers.

Micron Technology and South Korea's Samsung Electronics said Tuesday that they have received subpoenas seeking information for an industrywide U.S. probe into alleged anticompetitive practices among dynamic random access memory (DRAM) chipmakers.

Samsung, the largest producer in the $12 billion annual global market DRAM used mostly in personal computers, said it had been subpoenaed by the U.S. Department of Justice to supply information, but declined to specify.

Micron, the world's second-largest maker of DRAM, said the grand jury subpoena from the U.S. District Court for the Northern District of California was received on Monday.

"Micron does not believe it has violated U.S. antitrust laws," Kipp Bedard, the company's vice president of corporate affairs, said in a statement.

"The DRAM business is highly competitive and subject to extreme volatility. Competitive forces in today's market have led to DRAM prices reaching unprecedented lows," he added.

Standard 128-megabit DRAM chips were trading at around $2.60 on the spot market, according to global chip trader ConvergeTrade, well below cost price of between $4.50 and $5.

However, spot prices have rallied from lows of $1 in November to a high of $4.80 in March, coinciding with merger talks between loss-making South Korea's Hynix Semiconductor and Micron. The industry had hoped that Micron would cut capacity after taking over Hynix, but talks fell through in early May.

Hynix has often been accused by its rivals of over-investment and dumping, although selling prices well below cost can still cover the massive fixed costs that come with the capital-intensive chip production.

Japan's NEC and Toshiba, Japan's two largest chipmakers, in October threatened to file a complaint with their government charging foreign rivals with dumping DRAM chips. "Looking at the current DRAM market, it is clear there is unfair pricing that runs counter to healthy market competition," an NEC representative then said.

Infineon approached
Germany's Infineon, the world's fourth-largest DRAM memory chipmaker after Samsung Electronics, Micron and Hynix, said it, too, had been approached by the U.S. Department of Justice, but said no specific demands were made.

"Infineon will of course cooperate with officials conducting the investigation," a company representative said. "At this time it is not known if Infineon is being investigated or is just required to provide information."

Toshiba, which sold a U.S. DRAM production facility to Micron in December, said it had not been approached.

Micron also said it will cooperate fully with the investigation. Its shares rose 1.3 percent to close at $23.60 on Tuesday. Over the past year, its stock price has fluctuated between $16.39 and $44.99.

Infineon, which is exposed to the personal computer industry because of its DRAM memory chip business, generated some 22 percent of sales in the United States last year. Memory chip sales accounted for 28 percent of group revenue.

Micron, known as a prudent investor in new production capacity, since the 1980s has sued rivals from Japan, South Korea and Taiwan over the dumping of memory chips in the United States.

DRAM chips are the most common memory chips used in personal computers around the world, based on a single design which has made this a cut-throat industry where sheer size and low production costs are the means to compete.

Other, higher value memory chips are flash-memory, which store information after the power of an electronic device has been switched off. This makes them ideal for digital cameras and mobile phones.

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