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By | Andrew Orlowski 31st January 2006 02:35

Fourth DRAM cartel member fined $84m

Elpida takes the bullet

Elpida, a Japanese joint venture set up between Hitachi and NEC, has become the fourth memory maker to pay a penalty for fixing memory prices.

The company admitted to taking part in a conspiracy to set the price it charged to customers, including Apple, Hewlett Packard, Dell and Sun, between April 1999 and June 2002.

The case stems from a decade-long fight about who controlled the memory industry: Intel and IP company Rambus, or the largely Asian cartel. It's a fight which has also pitted two US regulatory agencies, the Federal Trade Commission and the Department of Justice, against each other.

The conspiracy has already seen executives from Infineon serve jail time. Samsung, Hynix and Infineon have each agreed to pay fines totaling $645m in what the DoJ describes as "one of the largest cartels ever discovered".

The memory cartel forced PC manufacturers to raise prices or cut the amount of DRAM installed in a system. The DRAM vendors maintain that they were losing money during this period hand over fist, and that memory was being sold close to, or below, the cost of production.

The Asian memory suppliers had balked at the terms set by Intel and Rambus in attempting to move the industry to its favored high bandwidth memory technology RDRAM. When RDRAM appeared, however, it was both expensive and scarce, and Intel subsequently agreed to support the manufacturers' favored SDRAM. Rambus launched a flurry of litigation at rivals who'd shunned RDRAM, including Infineon, Hynix, and Micron, claiming Rambus IP had found its way into SDRAM.

In 2002, the US regulatory agencies entered the fray from opposing sides. While the FTC launched an investigation and subsequently a lawsuit against Rambus, the DoJ went for the "dramurai" - with rather more success.

The FTC's case was rejected by a judge in December 2004, but the agency is appealing. FTC chairman Timothy Muris subsequently joined a lawfirm representing Hynix in the FTC case against Rambus. ®

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