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EU probes memory price-fixing charge

The European Union is investigating whether the world's largest memory makers conspired to raise chip prices in 2001, mirroring a probe being conducted by the U.S. Justice Department.

The European Union is investigating whether the world's largest memory makers conspired to raise chip prices in 2001, mirroring a probe being conducted by the U.S. Department of Justice.

The EU has been investigating allegations of memory price fixing since April 2003, a spokesman for Boise, Idaho-based Micron Technology said in an e-mail Tuesday.

The probe focuses on whether memory manufacturers such as Micron, Samsung and Infineon colluded to drive up prices in late 2001. At that time, the PC market was shrinking, but prices for DRAM and double data rate DRAM--the type of memory found in the vast majority of PCs--were skyrocketing. Some types of memory tripled in price in a few months.

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The shift raised eyebrows. Even in good times, memory prices often drop because of excess manufacturing capacity worldwide. At various times in the past five years, some memory manufacturers have had to sell chips at below manufacturing costs. During the same period, several companies exited the business or sold off fabrication facilities.

In April 2002, Michael Dell said that his company, PC maker Dell, began to buy memory from second-tier manufacturers to avoid cartel-like behavior of some memory makers.

Still, the memory price jump passed quickly. By the middle of 2002, prices were going down again.

Legally, the past few months have been active for memory manufacturers.

Last month, the Federal Trade Commission, in conjunction with its decision in the Rambus case, released portions of a November 2001 e-mail from a Micron executive that could suggest the three memory makers were in accord on raising DRAM prices during 2001.

"Subsequently, in a November 26, 2001, e-mail, a Micron manager named Kathy Radford described the efforts of Infineon and Samsung to raise DDR prices and stated that Micron intended to try to raise its prices to all of the OEM customers," the relevant part of the FTC decision stated. "Radford then reported that '(the) consensus from all suppliers is that if Micron makes the move, all of them will do the same and make it stick.' Prices did, in fact, increase in the months after Radford's e-mail."

In December, Micron sales representative Alfred Censullo plead guilty to trying to obstruct the Justice Department's investigation. About the same time as the plea bargain, Censullo resigned from his job.

Additionally, the FTC ruled that Rambus was not guilty of trying to illegally monopolize the memory market. The decision, along with a recent court victory against Infineon, potentially clears the way for Rambus to seek royalties from memory makers. The royalty claims could ultimately reach past $1 billion, according to various estimates.