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U.S. expands probe of chips

September 15, 2007|From Bloomberg News

The Justice Department has launched a criminal investigation of makers of the flash memory chips that go into cameras and music players, broadening its crackdown on possible price fixing in the semiconductor business.

Samsung Electronics Co., the world's second-largest chip maker, and Toshiba Corp., Japan's biggest maker of semiconductors, said Friday that they were cooperating with the probe. The companies are the world's two biggest makers of flash memory chips.

The Justice Department has spent more than three years conducting a criminal antitrust probe of makers of another type of memory chip, known as DRAM, charging four companies and 13 people, and levying fines of $731 million. In October, U.S. authorities opened an investigation of the SRAM market.

"I'm not surprised by the action, given recent investigations into SRAM and DRAM," said Edwin Mok, an analyst at Needham & Co. in San Francisco. "These are usually multiyear events. While some executives may be affected, it may not have a big impact on individual companies or the industry."

The market for Nand-type flash memory semiconductors, used as storage in portable consumer electronics such as digital cameras and some versions of Apple Inc.'s iPod music player, is forecast to grow 15% this year to $14.2 billion, according to El Segundo-based iSuppli Corp., a research firm.

Samsung "will cooperate fully," said John Lucas, a spokesman for the Suwon, South Korea-based company.

"Samsung is strongly committed to fair competitive business practices and forbids anti-competitive behavior," he said.

Toshiba has been subpoenaed and "is cooperating in what appears to be an industrywide investigation," the Tokyo-based company said.

Renesas Technology Co., a joint venture of Hitachi Ltd. and Mitsubishi Electric Corp., also received a subpoena, the Tokyo-based company said through U.S. spokeswoman Akiko Ishiyama. Renesas is cooperating and couldn't comment further, she said.

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