Dec. 29 (Bloomberg) -- Micron Technology Inc., as part of an
agreement to win amnesty from prosecution by the U.S. Justice
Department, may admit it conspired with competitors to manipulate
computer-chip prices, people familiar with the probe said.
Micron, the world's No. 2 maker of memory chips, is in talks
to provide information to bolster a possible U.S. case against
three other companies in the $16 billion market for dynamic
random access memory, or DRAM, chips, the people said. The U.S.
is probing whether Micron conspired with Infineon Technologies
AG, Samsung Electronics Co. and Hynix Semiconductor Inc.
Cooperating with the agency may allow Micron executives to
avoid prosecution. The department has won jail terms and fines in
price-fixing cases against companies including Archer-Daniels-
Midland Co. and Grey Global Group Inc.
``It would be nice to get something like this resolved
because it's the sort of thing that distracts management,'' said
Marc Klee, who manages the $500 million John Hancock Technology
Fund including shares of Boise, Idaho-based Micron.
Dave Parker, a spokesman for Micron, and Hynix spokesman
Bang Min Ho declined to comment. Phone messages left after
business hours for Infineon spokespeople Guenter Gaugler and
Monika Sonntag in Munich weren't returned, nor were calls to
Samsung spokesman James Chung in Seoul. Richard B. Cohen, an
attorney with the antitrust division of the Justice Department in
San Francisco, said the agency won't confirm or deny whether it
has amnesty agreements with companies.

Plea Agreement

Micron has declined to participate in a joint defense with
the other companies and instead is negotiating amnesty with the
department, the people familiar with the talks said.
Alfred P. Censullo, a former Micron sales manager, last
month agreed to plead guilty to obstructing justice in the price-
fixing investigation. He will admit he altered handwritten notes
about chip prices after a grand jury in June 2002 subpoenaed
documents from the companies. Obstruction of justice carries a
maximum sentence of 10 years imprisonment, the department said.
The Justice Department typically tries to prove a price-
fixing case with help from a company that participated in the
effort, said former Justice prosecutor Steven M. Kowal.

`Total Cooperation'

``What they demand is total cooperation,'' from the
informants, said Kowal, a partner at Chicago's Bell, Boyd & Lloyd
LLC and chair of the American Bar Association Antitrust Section
Committee on Criminal Practice and Procedure.
The department is investigating whether the four
chipmakers, which account for two thirds of industry sales, tried
to manipulate prices in the spot market for chips. About 80
percent of memory chips are sold in contracts with computer
manufacturers such as Dell Inc. and the remainder is traded on
spot markets in Asia and the U.S.

The spot prices form the basis for contract terms and are
used by investors and analysts to gauge global supply and demand.
Samsung, based in Suwon, South Korea, is the world's largest
maker of DRAM chips and controlled about 32 percent of the market
last year, according to Gartner Inc. Micron, which started
production in 1982 and had $3.09 billion in revenue last year, is
the No. 2 maker, with an 18 percent market share.
The Justice Department has also been speaking with Taiwan's
leading chipmaker, Nanya Technology Corp, according to Nanya.
``Our U.S. office has been contacted by the Department of
Justice regarding the investigation,'' said Pai Pei-lin, an
assistant vice-president at Nanya. ``The investigation has been
going on for quite a few months.''

Allocations

Nanya, the world's fifth-largest DRAM chipmaker, with about
7 percent of the market, denied any wrongdoing. The company's
policy prohibits discussion of prices or chip allocations to
customers in meetings with competitors, Pai said.
Micron's shares have risen 43 percent this year as the
company returned to profitability in the fiscal first quarter
ended Dec. 4 after three years of quarterly losses. Micron sank
69 percent in 2002, 13 percent in 2001 and 9.1 percent in 2000 as
an oversupply of chips reduced global prices and slowed revenue.
Shares of Micron gained 43 cents to $13.95 at 4 p.m. in New
York Stock Exchange composite trading. Samsung rose 6,500 won to
446,500 won and Hynix advanced 210 won to 5,460 won as of 9:18
a.m. in Korea. Infineon rose 34 cents to 11.08 euros in Xetra
trading.
The companies sell millions of memory chips each month to
computer and device makers. Prices and inventory costs can gyrate
in just a few days and hurt or boost profit because memory-chip
factories, unlike other chip plants, must run continuously.
PC makers last year were unhappy they had to pay twice as
much for memory chips with the newer DDR format than for chips
with the older SDRAM design, said Quinn Bolton, an analyst at
Oppenheimer & Co. who covers semiconductor companies including
Micron, Intel Corp. and Texas Instruments Inc.