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Tue, Sep 18, 2007 - Page 10 News List

Samsung shares drop amid US antitrust probe

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Samsung Electronics Co, the world's second-largest chipmaker, fell to a three-and-a-half-month low on Seoul's stock exchange after the US Justice Department began probing makers of flash memory over possible antitrust violations.

Samsung's shares fell 2 percent to 545,000 won (US$587), their lowest close since May 31, on the Korea Exchange. Samsung and Japan's Toshiba Corp, the two largest makers of NAND chips that store songs and pictures in cameras and music players, said on Friday they are cooperating.

The Justice Department may be broadening a crackdown on global chipmakers. After a price-fixing probe in the computer memory chip industry that led to US$731 million in fines, US authorities in October opened an investigation of the market for so-called SRAM chips.

SOURING SENTIMENT

"Investors hadn't been expecting a probe into NAND," said Lee Young-seog, who counts Samsung shares among the US$750 million he manages at Korea Investment Trust Management Co in Seoul. "This extra news is souring sentiment on Samsung."

Gina Talamona, a Justice Department spokeswoman, said last week that the Antitrust Division is investigating the "possibility of anti-competitive practices" among flash memory chipmakers. She declined to comment on specifics.

John Lucas, a Samsung spokesman, said the Suwon, South Korea-based company will cooperate "fully." Toshiba said in an e-mailed statement the Tokyo-based company is cooperating "in what appears to be an industry-wide probe."

Global sales of NAND flash chips, used in products such as Apple Inc's iPod music players, will probably increase 15 percent to US$14.2 billion this year, estimates by research firm iSuppli Corp showed. Unlike computer memory chips, NAND flash memory can retain data even when the power is turned off.

Samsung is the biggest maker of the chip, accounting for 46 percent of the market in the second quarter, iSuppli said.

RECORD LOWS

In July, the company reported its smallest quarterly profit in four years after a glut drove prices of computer memory chips to record lows. Second-quarter net income fell 5 percent to 1.42 trillion won (US$1.5 billion).

Toshiba was second with 28 percent market share, followed by Hynix Semiconductor Inc's 15 percent, the El Segundo, California-based researcher said.

Other producers include Micron Technology Inc, STMicroelectronics NV, Intel Corp and Renesas Technology Corp, iSuppli said.

Renesas, a venture between Hitachi Ltd and Mitsubishi Electric Corp, and SanDisk Corp, the world's largest maker of flash memory cards, also said last week they received subpoenas related to possible antitrust violations.

Intel and Micron said on Sept. 14 they have not received subpoenas on the anti-competitive probe. Bang Min-ho, a spokesman at Hynix said today the Ichon, South Korea-based chipmaker hasn't received any notice the company's under investigation and declined to comment further.

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