States to Sue Leading Chip Makers Over Price Fixing

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New York attorney general Eliot Spitzer sued leading makers of memory chips Thursday, claiming they made secret price-fixing arrangements that inflated the cost of personal computers and other electronic devices.

More than 30 other states were expected to file a separate but similar lawsuit against chip makers Friday in San Francisco federal court, California Attorney General Bill Lockyer said.

Boise, Idaho-based Micron Technology Inc. was granted immunity from criminal charges in the DOJ case in exchange for its cooperation in the case. The lawsuits follow a long-running U.S. Justice Department investigation that has resulted in more than $730 million in fines and guilty pleas from four companies — Samsung Electronics Co., Elpida Memory Inc., Infineon Technologies AG and Hynix Semiconductor Inc.

"I have never seen a price-fixing case where there is so widespread, so continuous an exchange of confidential price information among competitors or over so long a time period," said Assistant New York Attorney General Richard Schwartz.

The New York suit, filed in Manhattan federal court, claims the companies colluded to fix prices on dynamic random access memory, or DRAM, chips from 1998 until 2002. The defendants are Micron, Samsung, Infineon, Elpida, Hynix, Mosel-Vitelic Corp., Nanya Technology Corp. and NEC Electronics America Inc.

Micron spokesman Daniel Francisco had not yet seen the lawsuit Thursday and said it was not appropriate for him to comment on it. Other companies also declined to comment or did not immediately return phone calls.

Francisco said state attorneys general have been investigating the matter for several months, and the company is discussing "possible resolutions."

The lawsuit to be filed Friday in San Francisco names Hynix, Infineon, Elpida, NEC Electronics America, Micron (MU), Mosel-Vitelic and Nanya.

Samsung is not being sued in that case because the company has indicated a willingness to settle the allegations, Lockyer spokesman Tom Dresslar said. Similar agreements have been made with Winbond Electronics Corp., Toshiba Corp., Hitachi Ltd. and Mitsubishi Electric Corp., Dresslar said.

Computer makers such as Dell Inc. (DELL), Hewlett-Packard Co. (HPQ), Apple Computer Inc. (AAPL), International Business Machines Corp. (IBM) and Gateway Inc. (GTW) had to raise PC prices or reduce the amount of memory installed on their systems to compensate for the higher costs, prosecutors said.

The latest lawsuits will ask the companies to compensate consumers who paid higher prices and demand that the companies not collude in the future.

Worldwide sales of dynamic random access memory chips alone totaled more than $24 billion in 2005, according to separate reports from the research companies iSuppli Corp. and Semico Research Corp.