RealTime IT News

DOJ May Settle with Memory Chip Maker

Micron Technologies is expected to work out a settlement with the U.S. Department of Justice (DOJ) in the next few weeks as part of an ongoing investigation into the dynamic random access memory (DRAM) market, internetnews.com has learned from sources.

The anticipated deal comes after an executive for Micron agreed to plead guilty to obstructing the grand jury investigation of a suspected conspiracy to fix the price of DRAM products sold in the United States.

Micron's regional sales manager for upstate New York, Alfred Censullo, was charged in U.S. District Court in San Francisco last month with obstruction of justice for altering and concealing documents containing competitor pricing information, which were requested in a federal grand jury subpoena. Censullo was responsible for Micron's DRAM sales to customers in his region, including the server division of IBM .

DOJ spokesperson Blaine Rethmeier could not comment on the Micron's case outside of Censullo's charges, but did say that the department has an ongoing investigation of suspected price fixing in the DRAM industry. The Antitrust Division's San Francisco Field Office is conducting the inquiry with assistance from the FBI.

Boise, Idaho-based Micron spokesman Dave Parker was not immediately available for comment but told Bloomberg news this week that his company has "fully and actively cooperated with the DOJ and will continue to cooperate with the DOJ as appropriate."

Micron's investigation has a wide-reaching impact on the rest of the DRAM players, including Germany's Infineon Technologies AG and South Korea's Samsung Electronics and Hynix Semiconductor. But Micron's settlement with the DOJ has the most impact on Los Altos, Calif.-based Rambus , which also specializes in high-speed chip-connection technologies.

The thinking in some circles is that if Micron is in the process of settling with the DOJ, it would lend credibility to the evidence that turned up at Rambus' Federal Trade Commission (FTC) trial last summer, even though the two instances of alleged price collusion would be distinct and separate.

Word of the Micron/DOJ settlement was also fueled by news that judges with the FTC have issued a two-month extension of the deadline for giving an initial decision in the case against Rambus.

"If Rambus were to pursue a civil case of anti-competitive behavior against specific DRAM manufacturers, it would be likely considered to be deliberate intent ...and thus open to treble damages," American Technology Research analyst Erach Desai said in a note to investors. "It would seem foolish to us if Micron was to settle with the DOJ and leave themselves potentially vulnerable on the civil side, but we are not lawyers and logic has hardly been the underlying driver for the machinations behind the Rambus legal drama."

During the FTC trial last summer there was scattered evidence and testimony that suggested some of the major DRAM manufacturers deliberately low-balled the pricing of SDRAM in the late 1990s.

"[This was] so that Rambus' alternative (RDRAM) would never become economically feasible even though RDRAM was technically superior and had been widely endorsed by Intel, the premier CPU chip provider for PCs," Desai said.

Intel has since invested $450 million in Micron to advance their joint efforts in wafer production and memory technologies.

In 2001, Infineon Technologies accused Rambus of deception while it was working with the JDEEC Solid State Technology Association -- a standards-setting board -- to develop DDR SDRAM memory technology. The U.S. Supreme Court recently denied Infineon its final appeal to revive its fraud case against rival Rambus.

DRAM prices are currently trending upward. Recent market surveys showed a 15 to 20 percent increase month over month of order forecasts for October from major OEMs as inventory built up for Christmas.

Analysts say memory content has flattened out in the past month, but attributed it to low end customers "taking a breather" until the pricing stabilizes.

That has been cold comfort for Micron, whose fourth quarter and year-end results ended in a net loss of $123 million, its 11th straight quarterly loss.

To overcome its troubles, Micron has been slowly restructuring its business units to reflect changes in the memory marketplace, including its battles overseas with its South Korean rivals.

Recently, the world's second-largest computer memory chipmaker decided to phase out production of synchronous SRAM products at its worldwide operations. In April, the company sold off some of its inventory to Cypress Semiconductor .

Micron reorganized last year to focus on migrating its products from .13 to .11 micron manufacturing process technology.