Secret Atari DRAM Resale Operation Revealed by FBI

In 2009, I sent a Freedom of Information Act request to the FBI. I asked them for their 1970s and 1980s case files regarding Atari. They turned over a number of documents, and I quickly found what I had expected: Atari seeking assistance with stolen software. But one FBI case file stood out among the rest.

In November 1986, the US reached an agreement with Japan to limit the quantity and to set a minimum price for Japanese exports of DRAMs (computer memory) into the US. This was supposed to protect US based DRAM manufacturers from unfair competition, but it also resulted in a shortage of DRAMs for computer manufacturers who built systems in the US.

What did Atari do? According to the confidential sources in the FBI documents: in 1988, they shipped DRAMs from Japan to Atari's manufacturing plant in Taiwan. From there, they were shipped to their US offices. They had their employees strip off all the Atari logos and identifying information. The "cleaned" Japanese chips are then resold in the US in great quantity and at greatly inflated prices.

In the end, the cloak-and-dagger nature of the resale operation may have gone too far. It was Atari's own employees who turned them in to the FBI.

"...it was only a question of business ethics" (an Atari employee's defense of the company's actions from page 14 of the FBI report)

(an Atari employee's defense of the company's actions from page 14 of the FBI report) "...there were tire tracks ... inside the building ... even the mailman asked what was going on" (confidential source's report from page 29)

(confidential source's report from page 29) "...in violation of U.S. import laws and contrary to import agreements" (FBI determination to the Assistant US Attorney from page 42)

(FBI determination to the Assistant US Attorney from page 42) "...the company's supply of IC's would be totally shut off by the Japanese, if it were known that a company was "smuggling" in circuits not authorized." (confidential opinion from page 22)

The stakes of the resale operation were incredibly high. If knowledge of the operation went public,. Why would Atari risk so much? Was there something even more threatning to the company's survival that made Atari choose this as the lesser of two evils?

Sadly, I never finished what I set out to write three years ago. The story turned out to be far too rich for a tech to be able to do it justice. On this website, I've published the source documents, my notes and research, and a broad story outline. A full and complete story would have been great, but I think this will satisfy many of you. Outside of this website, I wrote an opinion piece over in the AtariAge forum which paints a broad picture of the whole story. So check it out, or use one of the tabs at the top of the page to explore more about this previously unknown story.