Feds Investigate Four Chip Makers

Details of exactly what was under suspicion and who is being probed were not released, leaving many observers wondering whether there is a valid reason for such a probe.

On Wednesday, legal experts said criminal antitrust investigations commonly focus on price-fixing or unusually blatant efforts among rivals to divide customers or markets.

But they also cautioned that companies that receive subpoenas aren't necessarily the targets of a U.S. investigation.

Analysts say the memory chip industry, which has just started to slowly recover from last year's downturn, has always seen wild price fluctuations.

'If you would say these guys must be colluding, then it looks rather odd that prices would have gone up by three and then dropped in half,' said David Wu with Wedbush Morgan Securities. 'So I don't know what data you could use to support collusion.'

Korea's Samsung Electronics Co., the world's largest maker of dynamic random access memory chips, Germany's Infineon Technologies AG, Hynix Semiconductor Inc. of Korea and Idaho's Micron Technology Inc. confirmed that they received subpoenas earlier this week.

The four companies, which make up a majority of the $12 billion global memory market, described the U.S. Department of Justice actions as part of an industrywide investigation and said they would cooperate.

Dana Perino, a spokeswoman for the Justice Department, said the department's antitrust division is investigating the computer memory chip industry but would provide no other details.

A federal official, speaking on condition of anonymity, confirmed that the subpoenas were part of an ongoing criminal investigation.

DRAM chips, the most common memory chips, now cost about $2 for 128 megabytes of memory. In March, they hovered around $4 per chip. That fluctuation is relatively tame compared to previous years.

'There was no investigation then, so what's the problem now? I don't get it,' said John Geraghty, an analyst at Gerard Klauer Mattison and Co.

Consumers aren't complaining. Cheap chips lead to cheap computers.

'I don't think anyone has been screaming about the price of PCs being abnormally high these days,' Geraghty said.

Meanwhile, the companies said they would cooperate fully with the investigation.

Micron, the Boise, Idaho-based chip maker, said it had received a grand jury subpoena Monday from the U.S. District Court for the Northern District of California seeking information related to the investigation.

Kipp Bedard, Micron's vice president of corporate affairs, said the company will cooperate fully with the Justice Department's antitrust division.

'Micron does not believe it has violated U.S. antitrust laws,' Bedard said. 'The DRAM business is highly competitive and subject to extreme volatility. Competitive forces in today's market have led to DRAM prices reaching unprecedented lows.'

Earlier this year, Micron reached a memorandum of understanding to purchase Korea-based Hynix Semiconductor to create the world's largest memory chip maker. That deal has since fallen through.

Shares of Micron closed down $3.52, or nearly 15 percent, to $20.08 in Wednesday trading on the New York Stock Exchange.

The Associated Press was unable to immediately determine which other companies, if any beyond the four that confirmed receiving subpoenas, were included in the investigation.

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