Exclusive: MKElectron executives struck 'basic agreement' on golf course in semiconductor materials price-fixing scheme

Prosecutors have determined that MKElectron, a semiconductor materials company, colluded with rivals to shore up its profitability as gold and silver prices used in its manufacturing processes surged. An indictment states that MKElectron reached "basic agreements" with competitors — including at golf outings — before carrying out price-fixing schemes involving bonding wire and solder ball materials.

According to the indictment obtained through the office of People Power Party lawmaker Kim Jae-seop, MKElectron, its current and former chief executives, its head of the first sales division, a former head of the overall sales division, and the head of the domestic sales team — five executives in total — were charged with violating the Monopoly Regulation and Fair Trade Act. Prosecutors concluded that MKElectron colluded with other companies to improve its profitability.

The criminal proceeds recovery unit of the Seoul Central District Prosecutors Office indicted MKElectron and its current and former chief executives without detention on Aug. 13 on charges of violating the fair trade law. Prosecutors also froze real estate held by MKElectron to recover 1.22 billion won ($898,000) in criminal proceeds. The investigation had begun in May, when prosecutors conducted search and seizure operations at MKElectron, LT Metal and Duksan Hi-Metal.

The indictment states that from around 2017, as growth in general-purpose semiconductor volumes — where bonding wire is most commonly used — began to slow and rising international gold prices squeezed operating profit, MKElectron colluded with rivals to avoid cutthroat competition and mount a coordinated response to customers' demands for price cuts.

Bonding wire is a fine metallic wire that connects a semiconductor substrate to a chip to transmit electrical signals. It is classified by material into gold, silver and copper wire. Prosecutors determined that a former MKElectron chief executive, identified as Person A, met with representatives of rival companies at a restaurant in Seongnam, Gyeonggi Province, where they discussed industry trends and agreed on basic principles for coordinating bonding wire prices and terms of trade.

According to the indictment, the collusion arrangement was handed over even after Person A was replaced as chief executive by the current head, identified as Person B. Person B was briefed on the agreement and its progress, and in 2023 reaffirmed the basic principles with rivals at a golf club in Gwangju, Gyeonggi Province.

MKElectron and its co-conspirators told one another they had raised prices to their customers and urged each other to follow suit, then submitted price-increase quotations to those customers, according to prosecutors. Prosecutors determined that between 2020 and 2025, the companies engaged in a total of 11 rounds of conduct — deciding, maintaining or changing bonding wire prices, or setting payment terms — that unlawfully restricted competition in the market.

Prosecutors also found that MKElectron colluded with another company on solder ball prices. A solder ball is a fine spherical metallic component that connects a semiconductor substrate to a chip to transmit electrical signals. Types include lead-free, high-lead and special-alloy solder balls. The cost of raw materials for solder balls rises with silver prices.

Prosecutors determined that MKElectron Chief Executive Person B, during a golf outing with a rival chief executive in May 2024, agreed to jointly raise prices, saying the two companies together controlled the domestic solder ball market and should coordinate their response to customers to push prices higher. The two also agreed to submit quotations to customers reflecting raw material cost increases published by the London Metal Exchange on top of existing prices.

Prosecutors found that MKElectron and its co-conspirators discussed four specific measures: continuously raising the topic of price increases with customers in advance; raising prices together so customers could not refuse the new prices; avoiding identical prices and instead factoring in a price gap to avoid arousing suspicion; and holding the line on prices even if customers tried to push them lower.

Following the chief executives' agreement on a joint response, the head of MKElectron's domestic sales team and others met at a coffee shop in Cheonan, South Chungcheong Province, in June of that year. There they shared the logic and calculation process for determining solder ball supply prices and agreed to jointly raise prices and submit quotations to customers in the second half of the year. Prosecutors determined that MKElectron and its co-conspirators colluded on solder ball pricing and related conduct in a total of eight rounds between 2024 and 2025.

People Power Party lawmaker Kim Jae-seop said the National Assembly would work to eradicate unfair trade practices such as price-fixing and to ensure a free and fair market order.