Sun to refile DRAM price fixing suit

After several legal battles, the company is again alleging that it has paid more than it should have for memory chips in its servers and storage systems

Sun Microsystems Inc. is promising to file a new lawsuit after a federal judge on Thursday threw out Sun's complaint that Hynix Semiconductor Inc. and other manufacturers of DRAM (dynamic RAM) illegally inflated their prices.

In March 2006, Sun filed a suit in U.S. District Court for the Northern District of California, alleging that it had been forced to overpay for memory chips in its servers and storage systems. In addition to Hynix of South Korea, the suit named Infineon Technologies AG of Germany, Japan's Elpida Memory Inc. and Mitsubishi Electric Corp., Taiwan's Mosel Vitelic Inc. and Nanya Technology Corp.

The charges echoed a similar complaint brought in 2002 by the U.S. Department of Justice. That suit has led to multimillion dollar fines paid by several companies. Likewise, in February, Samsung Electronics Co. Ltd. agreed to pay US$90 million in a DRAM price-fixing suit raised by a group of U.S. state governments who alleged that PC vendors such as Apple Inc. and Dell Inc. passed on the inflated costs to consumers. At the time, Hynix said it would continue to fight that suit.

Despite that success by government prosecutors, last week Judge Phyllis Hamilton dismissed Sun's complaint. Hamilton acknowledged Sun's arguments about the financial damages it had suffered from the overcharging, but said she needed to see more detail on DRAM market patterns in countries outside the U.S., said Kathy Engle, director of corporate communications for Sun.

Hynix did not respond to requests for comment. The company has not been distracted by its legal troubles, but has posted strong sales results in recent quarters. Hynix finished 2006 by leapfrogging Qimonda AG into second place in the global DRAM market, lagging behind only Samsung, according to the analyst firm iSuppli Corp.

Hamilton gave Sun a deadline of May 4 to refile the suit with the additional information about Sun's equipment sales in foreign markets, and the company expects to meet that timeline, Engle said. Sun plans to seek damages for the amount it overpaid on DRAM purchases.

"During the period in which these companies were fixing prices, a very large volume of DRAM was purchased, so we believe there was a significant amount of overcharging," she said.