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Micron Seeking Amnesty in DoJ Antitrust Probe?
deaddeng writes "Memory maker Micron Technology is allegedly seeking amnesty from a US Dept. of Justice grand jury investigation of price fixing, collusion, and antitrust by the memory industry, according to numerous news services, including the LA Times and Reuters. Last week, a Micron regional marketing employee pled guilty to charges brought under the same DoJ investigation for destruction of evidence and lying to the grand jury. The DoJ is investigating charges that major memory makers colluded to prevent the success of Rambus memory favored by Intel, and once that was achieved, colluded again to raise prices for DDR-SDRAM in 2001-02. If Micron is granted amnesty, it can keep its executives from facing criminal prosecution, but it may still face civil court challenges."
And Rambus Inc.'s practices are better?
Rambus, Inc.'s misbehavior is well-known, so Micron is hardly alone here. If Micron is guilty of collusion, the pregnant question is, "With whom were Micron colluding?"
As much as I can read into it: Micron went to the FTC and said: "Hey, we had a cartel with Infineon, Samsung and Hynix. Hee is all the evidence, we co-operate, please don't fine us!" No doubt that there will be large fines on the other alleged cartel members, if those allegations were to be proven true.
Note that Micron would still be liable for damages in any civil follow-up law suit. Oh, and the European Commission will start investigating as well, no doubt.
What, me cynical?
...and I'll freely admit that I haven't RTFA yet...
but Rambus surreptitiously cuts a deal with Intel to make their patented technology the new industry standard for memory, and when it backfires, the rest of the industry is guilty of collusion against Rambus?
The inmates are running the asylum, kiddos, and it's getting nuttier by the minute!
Blogging Weight Loss, Distance Education, and more at verlin.com
On the whole I'm in agreement with you, as my posting record will show, right down to the child labor issue. I started to work when I was 13, by choice, to make my own money and to contribute to society as an equal. To deny that right to a child is to deny the child equality, which is much the point actually.
However, just for the sake of argument, let us flip the situation around, shall we?
What if you are the poor person in a third world country? When it's time for the village party you could buy a Sony stereo and a stack of CD's for the music. This requires the village to support a capital intensive industry outside their economic borders. In the local ecomomy this is a massive investment, perhaps several years of the average income, and it all flows out, enriching Sony and Britney Spears and all the middlemen, but leaving nothing behind to the village.
Or, you could just hire the local mariachi band for five days average income, who will then spend that money at the village store, restaurant, cobbler, etc.
The money flows in a circle within the community, each peso doing the work of ten as it passes from hand to hand and the community is better able support itself without having to rely on outside experts from the developed world.
Well, the same principle holds for rich communities as well.
Think globally, but act locally. That means wherever you are locally.
Yes, that means the rich get richer, that's what happens when you apply principles of enrichment. But the poor get richer too by applying those same principles.
And if followed to its logical extreme the rich get richer that way without exploiting the poor, which is the real issue, not the wealth itself, thus accelerating the closing of the wealth gap.
KFG
As a ten year stockholder in Micron, I may be able to add a bit to this...
Sure Micron slashed job in Manassas (I live 5 miles away)...everyone was slashing jobs back then. The Hynix purchase was not shot down by the Korean govt. In fact, they were pushing for it. The government had bailed Hynix out of bankruptcy a couple of times already (via the state controlled creditors), and the company was pouring money down the toilet. Hynix was over $6B in debt, and threatening to take its creditors down with it. The deal was ultimately shot down by the Hynix board of directors despite severe pressure from their creditors. The pressure to abort came mainly from Korean unions who didn't want to be working for Americans (I could tell you alot more about this, having lived there for six years!).
As for what Micron's goal was, well your speculations about moving jobs outside the US or gobbling up competition may be correct. But, I'd speculate that when you're the world's #2 producer, and you've got a chance to become the world's #1 producer, you just take the shot...simple as that. Anyway, there's a good summary of the outcome here.
In an attempt to compete with companies that are able to sell memory at below cost prices because they don't have to make a profit (why bother when you're constantly bailed out?), it's hard to blame Micron for raising the memory dumping problem. That said, if they colluded to fix prices, they should pay the penalty too.
Just another day in Paradise
(*NOT* that there has been an implementation of true communism, except on extremely small scales.
Not for want of trying. Even if it were a good idea, communism as an economic system requires a political system that won't scale in terms of space or time and will fail disasterously if you try. "True communism" has not been implemented, not because of cruel chance, but because it has infeasible requirements.
The Hynix purchase was not shot down by the Korean govt. In fact, they were pushing for it.
You are correct. Maybe Micron thought with government backing, it was worth the effort to attempt the merger.
They have a big hiring banner in front of the Manassas fab. I do not know anyone that works there any more but obviously something is still happening there.
Bad boys rape our young girls but Violet gives willingly.
The memory industry is a lot like the guitar string industry. Excluding makers of goat, nylon, and other kinds of strings for classicals, there are only 4 manufacturers of steel core guitar strings. There are plenty of rebranders out there, but the odds are 50% any brand you buy is going to be made by the same company. One company dominates more than half of the total production with the remaining three slugging it out for their piece of the pie.
...in whatever they
In the face of such limited competition it is in the interest of all companies to price their products similarly, and to keep the prices to rebranders within a very small range of the same. Low enough to keep others from wanting to spend the enormous sums to start their own production facility, high enough because they can.
This really isn't very different from the memory chip manufacturers. You basically have 4 companies that produce almost all of the memory. Tons of others
rebrand it and claim it as theirs, some even handle
small bits of the production process. So they had a
nice situation going where even if it wasn't overt,
or even if it was, collusion was very practical and
beneficial for them. Then enters Rambus, and they want
a cut of every stick of the new kind of ram made,
and are trying to force their way in via IP law.
Of course the 4 big companies are going to resist this.
It's clearly in their interest to keep others out
of the market, and to keep from having to pay royalties
to someone outside of their control setting the
standards for what they will produce.
If a company were to enter the string market with a
proprietary kind of electric guitar string that
others had to pay a fee to make, and it was a total
newcommer to the industry -- you know the other string
makers would fight it tooth and nail. Even if they had
to collude to slash their cost to make the other
unappealing, or in the case that they manufactured the
competeting product for the invading company, to do it as slowly & inefficently as possible.
Do I think we win out of this? Yes, I do. Think for a minute about just how volitile the technology market is. How many companies can you rattle off in the last 20 years that no longer exist but were big players several years ago? When those companies go, the support goes, the support for the platform goes, the grouping of
people with the unique expertise
made..is diluted into the wider makerplace or
disappears entirely. If a few more of them had been
able to survive, we would have more divergent platforms
better long term upgradability, more choices in what
we got locked into, and we would be able to count on
XXX company being there 5-10-15 years down the line to
support out hardware/software/what have you.
Yes, we do pay more for this. Yes, an open standard
would be nice. But we get something as well, we get a
concentration of the people who are the absolute
experts in their field churning out our memory,
and they will use that expertise to churn out future
memory standards whatever they are. (As long as they
come without a fee, heh).
Please, their "money in the bank" is from convertible bond offerings; they've burned almost $2 billion in shareholder equity since 1999. The amazing thing is that anyone still believes their bullshit.
They aren't competitive in DDR (irony of ironies) because they were the last to shrink processes and the very, very last to move to 300MM wafers. They are good at stretching out a process, they are lousy and innovating. And don't even talk about their patent portfolio-- they have ZERO revenues from royalties going bacy 10 years, and the one time they tried to enforce their IP against Mosel-Vitec, it was thrown out by the federal district court on the grounds of prior art.
They used to be a competitor to Dell in the PC business with their MicronPC subsidary, which IMHO made some great computers, but they ended up selling that at a $170 million loss. They failed to diversify to flash, which the rest of the industry (including Intel and AMD, not just memory companies) used to ride out the bad time.
In the most recent quarter, MU posted "earnings" of $1 million on sales of $1.1 BILLION. They would have received a better ROE on a statement savings account. And memory prices have done NOTHING but decline since then. What keep MU going is political connections, being the largest employer in Idaho, and duties imposed on Hynix.
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