Samsung Fined $300M

San Francisco--It was a major setback for the Samsung as they had to shell out $300M as fine to Dell and HP, the major computer makers. Samsung Electronics has agreed to pay a $300-million fine for taking part in a price-fixing scheme involving memory chips that targeted major computer makers like Dell and Hewlett-Packard, federal prosecutors said Thursday.

Based in South Korea, Samsung and its subsidiary, Samsung Semiconductor, based in San Jose, California, will enter a guilty plea to a price-fixing charge Thursday in the U.S. District Court in San Francisco. The $300-million fine is the second-largest criminal antitrust fine in U.S. history.

“Price fixing threatens our free market system, stifles innovation, and robs American consumers of the benefit of competitive prices,” said U.S. Attorney General Alberto Gonzales.

Samsung, the world’s top memory chip maker, is one of several memory chip makers that have been charged in the antitrust case on the DRAM chip industry. DRAM chips store information in PCs, servers, TVs, music players, and many other consumer electronics products. Last year, DRAM sales generated $7.7 billion in the United States.

To date, the justice department has charged three companies and five people and levied fines totaling more than $646 million.

Hynix Semiconductor of South Korea pleaded guilty and paid $185 million, while Infineon Technologies of Germany paid $160 million. Four Infineon executives also pleaded guilty and were sentenced to four to six months in prison and paid $250,000 each. A sales manager of Micron Technology, based in Boise, Idaho, pleaded guilty to an obstruction of justice charge and served six months in home detention.

The government began investing the memory chip producers after the DRAM price began to increase in 2001, even though the high-tech industry was plummeting. Micron provided key evidence in an agreement with prosecutors. So far, Micron hasn’t been charged or fined.

In a statement, Samsung said it supports fair competition.

“Samsung is strongly committed to fair competition and ethical practices and forbids anti-competitive behavior,” said Chris Goodhart, a spokesperson for Samsung Semiconductor.

Alleged Collusion

Prosecutors said Samsung colluded with other DRAM chip makers to set prices between April, 1 1999 and June 15, 2002. The scheme targeted several large computer makers: Dell, HP, Compaq (now part of HP), Apple Computer, IBM, and Gateway.

Seven Samsung executives involved in the case are not part of the plea agreement and may face criminal charges. Both the prosecutors and Samsung declined to comment on the investigation.