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Sat, Jul 15, 2006 - Page 10 News List

Shares in memory chipmakers tumble after court action

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Shares of Samsung Electronics Co, Hynix Semiconductor Inc and Elpida Memory Inc fell after the world's biggest memory chipmakers were sued by US state governments that claim they conspired to fix prices.

New York Attorney General Eliot Spitzer sued Samsung and seven other chipmakers including Micron Technology Inc in Manhattan federal court on Thursday. California Attorney General Bill Lockyer said 34 states planned to file a separate suit in San Francisco yesterday against the companies, excluding Samsung.

The cases open a new chapter of antitrust claims against memory chipmakers, who were fined US$731 million after they pleaded guilty in a US Justice Department probe. The states are seeking reimbursement for the extra cost of computers, which Lockyer estimated at "hundreds of millions of dollars" nationwide. Antitrust law allows plaintiffs to seek triple-damages.

"It's difficult to calculate the damage, but it's definitely negative," said Michael Min, an analyst at Korea Investment & Securities Co. "This turns into reality the initial fears that the guilty plea would lead to a string of lawsuits."

Shares of Samsung Electronics declined 2.7 percent to 584,000 won as of the 3pm close in Seoul. Hynix dropped 3.1 percent. Elpida Memory Inc slid 2 percent to 4,430 yen at the 3pm Tokyo close. Mosel Vitelic Inc shares sank 3.8 percent at Taipei's close; Nanya Technology Corp shed 1.7 percent.

The state governments claim that consumers and state governments overpaid for products containing memory chips from 1998 to 2002 because the companies collaborated to inflate prices.

"The defendants in this case conspired to rig the market for this essential computer product, working together to keep prices artificially high," Lockyer said on Thursday in a statement, which didn't identify the other states. "They victimized individual consumers, governmental agencies, schools and taxpayers."

Micron, the biggest US computer memory chipmaker, fell 3.3 percent to US$14.32. US-traded shares of Infineon Technologies AG, the biggest producer of the chip in Europe, fell 2.8 percent to US$10.76.

The California complaint will name Infineon, Hynix, Micron, Elpida Memory Inc, Nanya Technology, NEC Electronics America Inc and Mosel Vitelic. Spitzer's lawsuit names the same seven companies, and Samsung.

The attorneys general said the companies conspired to limit chip supplies and agreed on what to charge customers in an effort to artificially drive up prices.

The lawsuits grew out of a global price fixing conspiracy investigation by the US Justice Department. Samsung, Hynix, Infineon, Elpida and 12 individuals have pleaded guilty and paid US$731 million in fines in that probe.

US prosecutors have said the leading victims of the conspiracy include computer makers such as Dell Inc, Hewlett-Packard Co and International Business Machines Corp, which use dynamic random access memory, or DRAM, chips, in their products. US sales of DRAM chips total US$5 billion annually, Lockyer said.

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