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Hynix says it can pay fine and still meet bottom line

South Korea's Hynix Semiconductor Inc, ordered to pay a US$185 million fine in the US for price-fixing, said yesterday it had sufficient funds to cover the penalty without hurting its bottom line.

It said it had already set aside provisions for contingent liabilities including this penalty and factored them into its balance sheet for last year.

Hynix agreed to plead guilty to a single count of participating in an international conspiracy to fix prices of dynamic random access memory, or DRAM, chips, a widely used semiconductor memory product for computers, mobile phones, music players and other electronic devices.

Hynix's penalty is the third-largest criminal antitrust fine in US history and the largest in five years, the US Justice Department said.

Hynix, the world's second-largest manufacturer of memory chips after local peer Samsung Electronics Corp, agreed to pay the fine to settle the antitrust investigation in the US.

The stock market took the news in its stride, with Hynix shares rising 0.4 percent to trade around 13,200 won, continuing to benefit from news Thursday that its creditors had agreed to end their oversight of the company and allow it to stand on its own two feet.

The creditors have controlled Hynix since they took over the debt-ridden firm in October 2001.

They put together a 3.2 trillion won (US$3.2 million) bailout package in 2003 to rescue the company from what looked like imminent collapse and had planned to oversee its restructuring up to the end of next year.

The Hynix' agreement to pay the US fine follows a deal involving German microchip giant Infineon Technologies AG, which reached an accord last year with US authorities that was followed by plea agreements that sent four of its executives to prison.

According to US authorities, Hynix executives participated in "meetings, conversations and communications in the United States and elsewhere to discuss the prices of DRAM to be sold to certain customers" and agreed with competitors to fix prices.

Hynix agreed to cooperate with the continuing investigation, which could involve other firms.

According to the one-count felony charge filed in the US District Court in San Francisco, Hynix conspired with others to fix prices of DRAM chips from April 1, 1999, to June 15, 2002, in sales to computer and server manufacturers.

The customers directly affected by the price-fixing conspiracy were, according to the Justice Department, Dell Inc, Compaq, Hewlett-Packard Co, Apple Computer Inc, IBM Corp and Gateway Inc.
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