Korean Ram unfairly subsidised, says US

The US Department of Commerce has preliminarily concluded that imports of some Ram chips from South Korea are illegally...

The US Department of Commerce has preliminarily concluded that imports of some Ram chips from South Korea are illegally subsidised by the government there, allowing the US to start imposing import duty taxes.

The department's determination against DRAM (dynamic RAM) devices from Hynix Semiconductor and other DRAM from South Korea, was prompted by a November 2002 complaint from Micron Technology.

The Commerce Department will hear evidence and make a final determination by 16 June. After that, the department would have to receive approval from the US International Trade Commission (ITC) before imposing a duty tax.

The ITC decision is due by 31 July, but it already ruled in December that US DRAM makers may have been harmed by South Korean subsidies.

David Parker, director of corporate communication for Micron, said his company was pleased with the Commerce Department decision.

"We think this validates our view that illegal subsidies have occurred and that the appropriate duty should be approved," he said.

The Commerce Department's preliminary evidence has Hynix DRAM chips subsidised at a 57.37% while chips from Samsung are subsidised at 0.16%.

The US will begin imposing an import duty tax on Hynix's loose DRAM and DRAM modules, with the funds held in a fund until the final ruling, said Richard Gordon, principal analyst for semiconductors with Gartner.

Oh-chul Kwon, Hynix vice-president, disputed the department's numbers. The department mistakenly concluded the Korean government provided financial support for a company restructuring effort in 2001 and 2002.

"Rather, the evidence demonstrated that the bank restructurings that were the focus of the allegations in this case were wholly decided by Hynix's creditors based on market principles," Kwon added.

"I have no doubt that at the end of this case Hynix will prevail and no additional import duties will be imposed on Hynix's shipments," he said.

Gordon said the duty tax should not harm Hynix in the short term, because the company has a US DRAM plant that could serve the US market without paying duty taxes.

The Commerce Department ruling also does not affect Ram that is imported into the US as part of a PC.

In April 2002, Micron and Hynix signed a memo of understanding for Micron to buy Hynix's memory business for more than $3bn, but that deal later fell apart when the Hynix board rejected the offer.

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