
Secret Atari DRAM Resale Operation Revealed by FBI (2013) - yuhong
http://www.atariarchives.org/atarileaks/
======
kabdib
From the AtariAge article:

    
    
        If you're looking for the point that Atari
        died, it would be the acquisition of Federated
    

I was a software engineer at Atari then. We were all pretty mystified about
why Jack wanted to buy a retailer. (Jack also tried to turn engineers into
salespeople for a while, having us "adopt" stores and try to sell computers
there. That did not go well).

I have the feeling that Jack, Sam and Gary Tramiel really only understood the
art of the slightly crooked deal; that's how they saw the business world.
Secondarily, they understood computer hardware, because a lot of that world
involved striking deals with suppliers, and that was the level they were happy
working in.

The world of software was largely opaque to them, and they never really
invested much in it, and never understood how to run long-term and larger
scale projects. Ultimately that marginalized them and they lost to competition
(Windows / Mac) that _did_ understand software.

------
hobs
Seems like a better link might be
[http://atariage.com/forums/topic/207245-secret-atari-dram-
re...](http://atariage.com/forums/topic/207245-secret-atari-dram-resale-
operation-revealed-by-fbi/#entry2672346) because the blog post refers to it as
the post containing a full explanation.

------
lifeisstillgood
tl;dr holy moly! In late '80s US government prevented Japan exporting cheap
DRAM into US (free trade anyone?). DRAM prices went through roof. Atari
covered holes in its own finances by reselling DRAM to major manufacturers
(SUN etc). The DRAM they resold was "smuggled" in outside the official
agreements. The sites owner has this from FOI requests.

This seems plenty plausible - and is one of many many reasons the WTO was a
good idea.

But boy, Atari smuggled DRAM ... Weird

~~~
aurhum
This was already illegal in pre-WTO times; The European Economic Community
filed a complaint under GATT rules (and won).

------
aftbit
Here's the executive summary provided by the FBI to the Attorney General's
office:

May 15, 1989

FBI SA and US Customs Agents advised Assistant US Attorney that source
information and investigation had determined that Atari Corporation was
importing 256K DRAMS into the US in false packing containers, and without
proper import documents in violation of US import laws and contrary to import
agreements between the US and the Japanese Ministry of Industry and Trade.
Atari purchases large quantities of DRAMS from Japanese manufacturers for use
in their Taiwanese manufacturing plants. Purchasing in Taiwan allows Atari to
obtain the DRAMS at a greatly reduced price. There are strict import quotes on
the DRAMS, because of Japanese flooding of the market in years previously but
there are no import duties. By shipping the DRAMS in the U.S., Atari can
thereby increase the price by approximately four times their purchase price.
The original manufacturers, whether Fujitsu or Mitsubishi would not be allowed
to import this quantity at this price into the U.S., because this practice
stifles U.S. manufacturers.

Investigation determined that Atari was importing large quantities, 150,000 or
more a wekk into the U.S. since May,1988. None were declared through U.S.
Customs, and it appears telexes and telephones were used to order specific
quantities in furtherance of this scheme.

Based on the above, Assistant US Attorney stated he would consider prosecution
of this matter under the Wire Fraud Statutes or 1001 Falsification of Import
Documents.

SOURCE: FBI Case 87A-SF-40454, Pages 42-43

------
dghughes
This reminds me a bit of a reddit user who as a teenager knew of the coming
ban of DRAM so he/she bought piles of them much cheaper before the ban.

And I think he said they had to desolder them from the boards. Then sold it
for a very large amount of money.

I forget who the user is maybe that's a good thing!

------
yuhong
Trivia: when the DRAM shortage was ending during 1989, 1Mbit DRAM prices fell
first. This is partly because Toshiba etc. started converting fabs from
256Kbit to 1Mbit DRAM back in mid-1987 but the demand for 256Kbit DRAM was
still increasing (Samsung was able to increase their market share in DRAM due
to this). Back then, 1Mbit DRAM yields was much lower than in 1989.

------
aurhum
The backdrop (and reason) for this smuggling operation was the 1986 US.-Japan
semiconductor trade agreement. A fascinating read can be found here (pdf):

[http://www.nber.org/chapters/c8717.pdf](http://www.nber.org/chapters/c8717.pdf)

~~~
rasz_pl
Intel decided to exit DRAM business in 1984 closing 8 fabs, two years later
ram prices skyrocketed.

[http://highered.mheducation.com/sites/dl/free/0073122653/280...](http://highered.mheducation.com/sites/dl/free/0073122653/280053/Case_1_1_IntelDRAM.doc)

interview with Intels GM of memory at the time:
[https://www.youtube.com/watch?v=XWJrsM4DxDU](https://www.youtube.com/watch?v=XWJrsM4DxDU)

~~~
yuhong
I think Intel ended up partnering with Micron and Samsung and selling their
DRAM under their own name in the end.

