Japan Asked to Levy Tariffs Against Hynix DRAM

Elpida Memory and Micron Technology's Japanese arm are behind the petition, which claims that the Republic of Korea is propping up Hynix through government-sponsored loans.

Elpida Memory and Micron Technologys Japanese arm have persuaded Japans finance ministry to consider levying duties on the import of DRAM manufactured by Hynix Semiconductor, allegedly subsidized by the Korean government.

Japans Ministry of Finance accepted the petition Wednesday morning, according to officials at Elpida Memory Inc. The petition covers all types of DRAM (dynamic RAM) and modules fabricated in the Republic of Korea by Hynix Semiconductor Inc. It also applies to any other company that buys Hynix DRAM and then exports it to Japan.

In a statement attributed to a "senior official," Seoul, South Korea-based Hynix said it would "continue its legal battle to terminate this illegitimate and unreasonable investigation as soon as possible."

The petition of "countervailing duties" mimics similar proposals filed in the United States and the European Union that essentially accused Hynix of dumping DRAM in the respective markets.

The resolutions have claimed that the Republic of Korea is propping up Hynix through government-sponsored loans and allowing the chipmaker to manufacture DRAM with a lower cost structure than its competitors. This is allowing Hynix to sell the DRAM at a lower cost and still turn a profit, the resolutions claim.

In February 2003, for example, Sens. Mike Crapo and Larry Craig, both Republicans representing Micron Technology Inc.s home state of Idaho, called upon the U.S. secretary of commerce and the U.S. trade representative to take action to end the bailouts. Hynixs actions "have resulted in severe distortion of the world DRAM, ... semiconductor and electronics markets," Crapos resolution said.

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In July, the International Trade Commission (ITC) found that the domestic DRAM industry was materially injured by Hynix Semiconductors subsidized DRAM imports into the United States, and the commission allowed a 44.29 percent tariff on Hynix DRAM to go into effect. A similar tariff has been applied in the EU.

But Hynix officials said the Japanese government has itself propped up Japanese banks to stabilize the financial sector. "It therefore makes little sense for Japan to find a subsidy from this investigation, since it would be extremely hypocritical for Japan to criticize Korea for taking the same actions as Japan," Hynix said.

The actions taken by the South Korean government were "commercially reasonable," Hynix said, and thus did not violate the World Trade Organization regulations. WTO bylaws prohibit government subsidies to be used to lower the cost of goods sold.

In Crapos resolution, the countervailing duties were assessed at 80 percent. The Japanese petition did not disclose the amount of proposed duties.

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