San Francisco: Micron Technology Inc., the largest US maker of computer memory, agreed to settle a lawsuit with Oracle Corp. over chip prices, increasing its second-quarter loss by $58 million (Dh213 million).

The suit claimed that Micron conspired to increase prices for dynamic random access memory (Dram) from 1998 to at least 2002, the company said Friday in a statement. The deal widens Micron's previously reported quarterly loss to $282 million, or 29 cents a share. Sales in the period, which ended March 1, are now $2.01 billion, compared with the original $2.07 billion.

Oracle sued Micron in 2010, alleging it overcharged Sun Microsystems, which Oracle acquired. The case was partly based on a 2002 US Justice Department investigation of price fixing in the memory-chip industry that led to claims against four companies and 16 people who had been fined $731 million. Micron cooperated with US officials in exchange for not being charged with a crime, according to Oracle's complaint.

The memory manufacturers "conspired to control production capacity, raise prices or slow their decline, allocate customers, and otherwise unlawfully overcharge their Dram customers," Oracle said in its complaint.

Production glut

Even before the settlement, Boise, Idaho-based Micron had reported its third consecutive loss in the quarter. A glut of memory-chip production has sent prices tumbling, making it harder for Mic-ron and its competitors to stay profitable.

Micron shares fell 33 cents, or 3.9 per cent, to $8.10 at Friday's close in New York trading. The stock has climbed 29 per cent this year.

The picture may improve if the bankruptcy of Japan's Elpida Memory Inc. reduces industry output, according to Alex Gauna, an analyst at JMP Securities LLC in San Francisco.

Bids in rival firm

Two of Micron's rivals in memory chips said they are considering bids for Elpida assets. South Korea's Hynix Semiconductor Inc., the second biggest producer of computer memory behind Samsung Electronics Co., submitted an initial proposal for Elpida, according to a regulatory filing.

Toshiba Corp. is also considering a bid, a senior executive for the Tokyo-based company said yesterday, asking not to be identified because the discussions are private.

The settlement with Oracle couldn't be independently confirmed in federal court in Oakland, California.

Deborah Hellinger, a spokeswoman for Redwood City, California-based Oracle, declined to comment, as did Micron's Daniel Francisco.

Hardware business

Oracle, the largest maker of database software, acquired Sun for $7.4 billion (Dh27.18 billion) in January 2010, vaulting the company into the computer hardware business.

Oracle's hardware sales missed analysts' projections last quarter as the company sacrificed volume for higher-margin products. Oracle has been emphasising sales of large systems for data processing, at the expense of Sun's less expensive gear.

"Next fiscal year, our hardware business should be a growth story," Oracle Chief Executive Officer Larry Ellison told analysts last week on a conference call.