Samsung executive pleads guilty to price fixing

Il Ung Kim is the sixth Samsung executive to plead guilty to DRAM price fixing and the 15th conviction overall in a scheme that involved several manufacturers

An executive at Samsung Electronics has agreed to plead guilty to charges that he took part in a conspiracy to fix prices for memory chips bought by Dell, Hewlett-Packard, and other PC vendors, the U.S. DOJ (Department of Justice) said Thursday.

Il Ung Kim, a South Korean citizen who has been vice president of marketing for the memory division, agreed to pay a $250,000 fine and to serve 14 months in jail. If a judge approves the deal in a hearing on April 25, the punishment would be the longest imprisonment ever assigned to a foreign defendant charged with price fixing in this country, the DOJ said.

Kim is the sixth Samsung executive to plead guilty in a scheme by several semiconductor manufacturers to set high prices for DRAM chips, which are used to provide high-speed data storage for PCs, handsets, cell phones, routers, digital cameras, TVs, set-top boxes, gaming consoles, and digital music players. DRAM manufacturers sold $28.7 billion of the chips in 2006, the DOJ said.

DOJ prosecutors have charged 18 individuals and four companies in their criminal antitrust lawsuit, saying they formed a cartel to suppress competition through fixing prices for DRAM chips purchased by certain PC and server manufacturers. So far, the charges have lead to 15 convictions and $730 million in court-imposed fines for the actions.

Samsung, of South Korea, plead guilty to related charges in 2005, and agreed to pay a $300 million fine. Other DRAM manufacturers paying fines include Hynix Semiconductor of South Korea, Infineon Technologies of Germany, and Elpida Memory of Japan.

The DOJ is committed to prosecuting executives who break U.S. antitrust laws "even when those executives conduct their cartel activity overseas," said Thomas Barnett, assistant attorney general for the DOJ's antitrust division, in a statement.

The DOJ filed its original case against Kim in an indictment filed in October 2006 in U.S. District Court in San Francisco. Kim and two colleagues conspired between April 2001 and June 2002 to raise DRAM prices for sales to Dell and HP as well as Compaq, IBM, Apple, and Gateway, the DOJ said.

Kim's co-defendant Gary Swanson, once the senior vice president of memory sales and marketing at Hynix, is scheduled for a Sept. 10 trial on the charges. The third defendant, Korean Samsung executive Young Bae Rha, is still at large.

In response to Kim's guilty plea, Samsung noted that it had already settled the issue on a corporate level, having "previously reached a comprehensive settlement in the DOJ's industry-wide investigation into alleged price-fixing," according to a statement by Chris Goodhart, Samsung's director of marketing communications.

"Samsung is strongly committed to fair competition and ethical practices and forbids anti-competitive behavior," she said.

This story was updated on April 19, 2007