Bloomberg News

Rambus Jury Asks to Review Testimony in Hynix-Micron Trial

October 12, 2011

(Updates with deliberations ending for the day.)

Oct. 12 (Bloomberg) -- The jury deliberating whether Hynix Semiconductor Inc. and Micron Technology Inc. conspired to push Rambus Inc. out of the memory-chip market asked to review trial testimony by Michael Sadler, a Micron vice president.

Today’s request by the San Francisco state court jury, which finished its 11th day of deliberations at 4 p.m. local time, is the second time the 12-member panel has sent a note to the judge asking to see Sadler’s testimony. The first request was on Sept. 29.

During the trial, which started June 8, Rambus lawyers showed the jury video testimony of Sadler saying that he ceased e-mail communications about chip pricing in 2002 because Micron received a U.S. Justice Department subpoena as part of a price- fixing investigation. Sadler is vice president of corporate development at Micron.

Rambus, based in Sunnyvale, California, contends that Boise, Idaho-based Micron and Ichon, South Korea-based Hynix colluded to cut the prices of their own memory chips and deserted their commitment to produce a Rambus-designed chip, relegating it to a niche role.

Rambus contends it would have earned $3.95 billion in royalties without the alleged conspiracy. Under California law, a jury finding of damages in that amount would be automatically tripled to $11.9 billion.

Lawyers for Hynix and Micron argued that Rambus has only itself to blame, not collusion by rivals, for the failure of its product to become the industry standard.

Price Fixing Probe

Hynix, in 2005, and some of its employees pleaded guilty to U.S. charges of fixing prices of some chips. A Hynix lawyer told the jury in the current trial that Rambus-designed dynamic random access memory chips weren’t among the products cited in admissions of wrongdoing in the criminal case.

In March 2008, Gary Swanson, a Hynix senior vice president and the first executive to face trial in the federal probe, won dismissal of criminal price-fixing charges after a jury failed to reach a unanimous verdict.

In that case, in which at least a dozen other defendants pleaded guilty, prosecutors argued that Swanson directed his sales staff to gather pricing information from competitors so chipmakers could agree to simultaneously raise prices for Apple Inc., Dell Inc., International Business Machines Corp. and other U.S. companies.

The San Francisco jury in the federal price-fixing probe was shown e-mails to and from Swanson, his bosses and his sales staff, and evidence of 55 phone calls in 2000 and 2001 between Swanson and Micron’s Sadler. Sadler, granted immunity by the government, testified against Swanson during the nine-day trial.

Specific Prices

Swanson testified that price decisions were made by his superiors in Korea and said he never talked about specific prices with Sadler or asked his staff to gather specific price information. Sadler and Swanson discussed general industry trends such as chip supply and demand and also talked about Micron’s discussions to acquire Hynix, Swanson told the jury.

Micron avoided prosecution in the price-fixing probe by cooperating with the Justice Department.

Rambus rose 1.75 percent to $15.68 in New York trading.

The case currently in trial is Rambus Inc. v. Micron Technology Inc., 04-0431105, California Superior Court (San Francisco). The criminal case against Swanson is U.S. v. Gary Swanson, 06-692, U.S. District Court, Northern District of California (San Francisco).

--With assistance by Karen Gullo in San Francisco. Editors: Peter Blumberg, Mary Romano

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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