Infineon To Pay $160 Million For Fixing RAM Prices

Jerrod K writes "Infineon Technologies pleaded guilty to charges of price fixing in an international conspiracy. The Justice Department said this is the third largest antitrust settlement ever. Other memory chip makers involved include Hynix, Samsung, and Micron Technology." Reader phalse phace adds a link to CNET's coverage.

Now thats fair.

[DAldredge]

A local family man is facing 20+ years in prision for walking into the vault at the back where he worked and taking 100,000 USD.

Why do large corps get away with crap like this, hell the goverment doesn't even go after those whitecollar criminals that skip bail...

But, normal crimes they come down hard on.

Free market isn't perfect

[revscat]

Cases like this remind me why I don't think the libertarian philosophy towards free markets is all that realistic. Many libertarians believe that things such as this should be left to the marketplace to settle, and that government "interference" like this ultimately harms the market. I emphatically disagree. There are inherent flaws with the free market that the justice system can and should remedy so that the overall market is healthier thereby. Collusion does no one -- consumers, industries, or the economy as a whole -- any favors, and I fail to see how letting the market handle it would do anything but unfairly fatten the pockets of those who benefit.

Still.

[ShizCakes]

This fine may be huge, but will we see a benefit from it? Probably not.

Re:Does this mean memory prices will fall?

[mr_spatula]

Sure. Just like CD prices fell after the CD price fixing settlemet... oh, wait...

Then I guess this will be like my rates with progressive going lower after they had the class action law suit over adjusting rates based on credit... oh, wait... that didn't happen either.

The only peopel to benefit from this will be the lawyers and the major companies - the rest of us will be lucky to get a coupon for a dollar off.

Re:Now thats fair.

[slashjames]

It all comes down to keeping control of the country/society. There is more "common" crime than "white collar" crime; therefore you punish the common criminals more severly to keep the commoners in line, and make a show out of punishing the white collar criminals. Always bear in mind there are a LOT more people who make $100k.

And there's still Rambus to deal with

[optimus2861]

The latest info I can find dates from around May [infoworld.com], but Infineon is one of the DRAM makers facing a patent-infringement lawsuit from Rambus, and if that doesn't go well for them (Rambus had an initial setback but has been getting favourable rulings since; anyone who wants to cry "submarine patent!" better read up on the history, it's nowhere near that cut-and-dry) they could very well go under. I think they will lose it, and get hit with willful infringment for triple damages, which will easily run the damages into the billions. I doubt Infineon could absorb that.

Re:And just how do I benefit?

[gl4ss]

there's added incintive for the companies to NOT DO THIS SORT OF THING now, the society as a whole benefits and that is how you get the benefit.

that's the whole point of those fines, you make the RISK of running such price fixing schemes too high that they don't want to take it.

like the fairly recent cartel busts in metal and paper industries(northern+mid europe)... you don't directly get anything but by punishing with hefty fines (also in the 100m+ range)they send a message that "don't fucking do this".

Re:Free market isn't perfect

[Jahf]

You're right in the "many libertarians" statement, but that doesn't mean it is a clear majority. Unfortunately for Libs (like me) there are really 2 Lib groups within the party. Right/Conservative and Left/Liberal.

The Liberal side would be more in favor of government taking care of business like this but trying for the most part to stay out of other places like social laws (most especially privacy). The Conservative side is more set on seeing government stay out of business entirely as well as the social aspects.

I'm primarily a Libertarian Left because I'm more moderate on business than a Democrat, but far more liberal on social issues than a Republican, and I think both parties have sold out when it comes to privacy. However in this case I think the matter was solved properly.

Word dectives saw this case coming...

[LostCluster]

They just broke down the company name to Infineon...

Re:The $160 million dollar tax question...

[cmstremi]

But those that were harmed already have the memory they needed. All the discount RAM in the world isn't going to be a remedy to everyone - only those who need more memory.

Re:Sweet.

[Jason1729]

I don't know, but comparing the die size of the CPU to the area taken up by the chips on the memory module, it 'looks' like the memory is at least as dense as the CPU.

I'm pretty sure (but not certain) that a memory fab plant costs more to produce than a CPU plant, but the memory plant will produce far more chips over its lifetime.

Jason
ProfQuotes [profquotes.com]

Re:Conflict of Interest

[Zed2K]

"why aren't our taxes going down?"

Mine did. Tax tables changed, I took more money home. I bought a house, deductable interest, even lower taxes. Don't know what you problem is.

Re:And just how do I benefit?

[Billy the Mountain]

Yes, these wonderful lawyers who are doing this for the little people like you and me.

Actually, yes. Imagine that, a lawyer can right a social wrong AND get paid well at the same time. Sounds like a noble profession.

Disclaimer: IANAL

BTM

Re:The $160 million dollar tax question...

[Casca]

Oh yeah, that would be a great idea, let them dump to gain market share. Too bad for their competitors.

Re:Sweet.

[Jason1729]

My guess is you'd need some non-volitile storage to keep track of the bad bits and the mappings. A little non-volitile memory will more than double the cost of the chip and the remapping will slow the memory down to much.

Reasonable prices now?

[Guspaz]

Does this mean that companies like Dell (Any big computer company really) will stop charging five times more than retail for memory upgrades?

I tried to price it on Dell's site for notebooks. In retail, 2x256 is the same price as 1x512, more or less. (All prices that follow are Canadian)

Dell charges 200$ for the DIFFERENCE between them.

To upgrade from 2x256 to 2x512, they charge 600$. They should be charging about 150$. When I purchased a DDR333 512MB SODIMM, I paid 144$.

Now, even when using ultra-premium ram (Which they don't), there's a big difference between 144$ and 600$.

Why do we fine coporations and jail humans?

[nlinecomputers]

If I personally break the law I will probably be incarcerated for my crimes. Yet a corporation who's only job is to make more money then it spends simply pays a fine. If I am in jail I can't earn any money or perform any deeds outside of a very limited set of rules. Corporations shouldn't be fined. They should be forced to shutdown or even be disbanded.

Fine line between "dumping" and fixing

[EmbeddedJanitor]

So if you get together with the other RAM vendors to stabilise the market to keep it sustainable (like OPEC and many others do) then that's illegal price fixing.

If you sell at too low a prices then you're "dumping" and that's illegal too.

One law is there to protect the consumer and the other is there to protect other suppliers.

Unless companies can sustainably make profit from their silicon sales we're doomed to boom and bust cycles where we oscillate between RAM surpluses and RAM shortages. In the long run, we all lose if these companies cant stabilise and make reasonable profits.

Re:Sweet.

[ackthpt]

I mean, seriously. The prices were ludicrous for high-end manufacturers, and the low-end can sometimes die, and you have no recourse.

Meanwhile the price of petroleum continues to drop, yet we're still shelling for $2/gal. (yeah, I know it's cheaper than in Europe, but you pay more taxes on it than we do.) Heck, with all the oil execs in Washington DC, in the government, it's small wonder nobody investigates price fixing of that commodity, heck, how could they run a re-election campaign if they found what pretty much everyone should know - they are a cartel and they run the government. Infineon's error was not getting their own people into high office.

Re:Now thats fair.

[AuMatar]

Hear hear!

The CEO of Infineon obviously knew they were price fixing. There's no reason that he should be allowed to get away with it. There ought to be a chunk of that fine coming from HIS pocket, and a nice long stay in club fed afterwards. As it is now, there's no incentives for the CEOs not to break the law- if they don't get caught, they make tons of money, if they do, the corporation pays the fine and they've STILL made money.

They made billions, fined a few million.

[Anonymous Coward]

I'm sure they learned their lesson: keep doing it.

Re:Fine line between "dumping" and fixing

[SpecBear]

I don't see how it's a fine line between dumping and fixing. They seem to be polar opposites. As I understand it:

Fixing: I get together with my competitors and we all agree to sell products at a certain price. Since we're no longer competing against each other, we can negate the downward pressure on prices (and thus profits) that usually results from a competitive market.

Dumping: If I happen to have a bunch of money, instead of cooperating with my competitors, I try to kill them off. I price my products below the cost to make them, ensuring that nobody can run a sustainable business in the market. Since I have a bunch of money, I can last longer than my competitors. Once they die off or move on, I have a monopoly and can jack up prices far above what a competitive market would support.

We all lose if these companies can't stabilize, but we all win if the companies that can't manage their freaking inventory die off and make room for companies that actually read their history and learn from it. Collusion won't end the boom/bust cycle. It'll just ensure that the consumer gets screwed on prices regardless of whether there's a shortage or a surplus.

Re:Sweet.

[Anonymous Coward]

Memory is easy to design if you never plan to sell it. If you want to be competitve in the market, it is insanely difficult.

Memory makers must violate silicon design rules to increase density and remain competitive. This type of process tuning is on-going, and stabilizes just barely before the fab is obsolete.

CPU design is a bunch of hdl that you can get 10 trained monkeys to write. Process tweaking is black magic(k).

Re:Sweet.

[Maserati]

You're damn right they do this. And some systems (Macs) are *very* finicky about their RAM. An 'underclocked' DIMM may technically meet the electrical specifications for what they're selling it as, but still not meet the system's standards.

I've only found one manufacturer to never sell me an underclocked chip: Kensington. Of course, I suspect they sell their underclocked chips to other vendors as an OEM, but I can still trust the Kingston label. Others may be as good, but I haven't tried 'em all and Kingston has been reliable for 5 years.

Re:Big cartel, this one? Pffft.

[Lord_Dweomer]

Businesses don't have militaries?

Lets not forget about BlackwaterUSA [blackwaterusa.com] which IS a business military, currently hired by our government.

Re:Fine line between "dumping" and fixing

[bwd234]

"Dumping: If I happen to have a bunch of money, instead of cooperating with my competitors, I try to kill them off. I price my products below the cost to make them, ensuring that nobody can run a sustainable business in the market. Since I have a bunch of money, I can last longer than my competitors. Once they die off or move on, I have a monopoly and can jack up prices far above what a competitive market would support."

Um, isn't that exactly how WalMart works and I don't see them being fined or otherwise in trouble with the government.

Re:Does this mean memory prices will fall?

[Anonymous Coward]

They're a bit cheaper in the UK now too, probably due to being in competition with Kazaa.

They used to be a cheaper still, but then they stopped the grey imports :(

no shit sherlock.

[Anonymous Coward]

this article is a crock of shit, and the doj has taken a bribe.

the articles say that price fixin only occured from 99 to 02? look at the scoreboard budda. ram has ALWAYS been very expensive. it's made out of fuckin sand! there is no real cost with a low yeild...you just make more of it.
then there was the mysterious ram factory fire that got hushed up early reports indicated that there was no equipment found after the fire. what could that imply.

on top of this, infineon set aside 300 million for the fines, and was only fined half? could they be more obvious.

lets be realistic here. the doj only reacted because tons of people knew they were being ripped off--kinda like with M$. antitrust exists in nearly all walks of american consumerism. doj should read deparment of jokes. oil is a huge scam, electricity is screamin me too! remember when power was oing to be too cheap to meter? but the biggest scam has to be the auto industry. after almost a century of assembly lines the price of automobiles still continue to rise faster than inflation.
americans should wake up and smell the coffee... no wait, they just had a huge worldwide price hike too. its no small news that dairy, wheat board/cartels were invented in the us. what the american people should do is sue, and imprison the entire department of justice for not doing anything at the very least, and more likely, taking bribes and allowing this kind of thing to take over corporate america.

Re:Now thats fair.

[DAldredge]

MCI/Worldcom came out in a BETTER position as they where about to right of large portions of their debt during the bankrupcy. Now they have much less debt than most of the companies they compete with.

IOW, cheating pays.

Re:Now thats fair.

[Fjandr]

I'm all for dissolution for corporate crimes. Corporations owe their existence to the state they are incorporated in. If they violate their charter, they should be dissolved.

Re:The $160 million dollar tax question...

[illumin8]

It's a fine, not a settlement. They're expected to cut a check for the amount to the government, not reimburse consumers.

Do you realize how messed up our anti-trust system is? So, Infineon engaged in price-fixing, and gouged the consumers for more money. Now, the government says "pay up", and Infineon just has to raise prices in order to cover this $160 million loss. In both cases the consumer got shafted. Once by the company, and the second time by the government. These settlements should go directly to the people that bought systems during the time period that price fixing was occurring.