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U.S. Justice Department Subpoenas Sony in SRAM Probe

U.S. Justice Department Subpoenas Sony in SRAM Probe, PlayStation 3, battery recall

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November 1, 2006 – Adding to the laundry list of problems for Sony Corp., the company announced yesterday that the U.S. Department of Justice subpoenaed the electronics company for possible anti-trust violations with their SRAM chip business, according to a Reuters story published yesterday.

In an industry-wide probe, the Justice Department is investigating other electronics manufacturers including Mitsubishi Electric Corp. and Samsung Electronics Co. Ltd., according to Reuters.

In a separate probe, the U.S. Justice Department is also investigating U.S.-based Cypress Semiconductor Corp. for possible price fixing of SRAM chips, according to the Associated Press yesterday.

The Justice Department has already fined other corporations. Samsung Electronics was fined a total of $731 million for fixing the price of dynamic random access memory (DRAM), according to the Associated Press. SRAM (static random access memory) and DRAM, are types of memory used in computers, telecoms, and networking equipment.

According to the Associated Press, Sony SRAM sales totaled 3.3 billion yen ($28 million USD) last year. Even though SRAM sales only make up a fraction of total net sales for the company, the recent investigation into Sony's business ethics only adds to an already overflowing barrel of woes the company has faced this year.

Sony has witnessed financial dips and severe product problems over the last few months. Last week, Sony reported a 94 percent plummet in net profit from last year, due largely to a worldwide battery recall of potentially flammable products. The Sony Li-ion laptop battery recall, causing headaches and even tears from the Sony bigwigs in a public apology, has affected most major computer manufacturers, including Apple, Dell, and Lenovo. The Sony battery recall totals 9.6 million products and has cost the company $429 million.

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To make matters worse, the much anticipated launch of the Sony PlayStation 3, which could have potentially been Sony’s saving grace, has been pushed back in Europe until next spring, notably after the holiday shopping season, according to the Associated Press.

Even with the battery recall, the PS3 delay, and the SRAM investigation, Sony may face an even larger problem – the struggle to win back consumer confidence.

Company representative Atsuo Omagari said Sony plans to cooperate with the U.S. Justice Department in the investigation, according to the Associated Press.

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