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 dynamic RAM (DRAM) devices from Hynix Semiconductor and other DRAM from South Korea, was prompted by a November 2002 complaint from Micron Technology, based in Boise, Idaho.
The Commerce Department will next hear evidence from interested parties, then is due to make a final determination by June 16. 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 July 31, but it already ruled in December that US DRAM makers may have been harmed by South Korean subsidies.
Director of corporate communication for Micron, David Parker, 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 per cent rate. Chips from Samsung Electronics were subsidised at a 0.16 per cent rate, the department said.
The US began imposing an import duty tax of 57.37 per cent on Hynix's loose DRAM and DRAM modules following the ruling on Tuesday.
The monies would be held in a fund until the final ruling, Gartner's principal analyst for semiconductors, said Richard Gordon, said.
Hynix vice-president, Oh-chul Kwon, disputed the department's numbers.
The department mistakenly concluded the Korean government provided financial support for a company restructuring effort in 2001 and 2002, Kwon said.
"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 said.
He was confident the Commerce Department will still rule in favour of his company. "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 shouldn't harm Hynix in the short term, because the company has a DRAM plant in Oregon that could serve the US market without paying duty taxes.
The Commerce Department ruling also did not affect RAM that was imported into the US as part of a PC.
But the European Union was considering a similar action against Hynix, and if both the US and EU levied duties against the company, it might dump its RAM in the Asian spot market, and that might in turn drive down RAM prices worldwide, Gordon said.
"It's a bad idea," Gordon said of the Commerce Department action. "In the long term, it'll damage companies like Micron, which it is supposed to protect."
In April 2002, Micron and Hynix signed a memo of understanding for Micron to buy Hynix's memory business for more than $US3 billion, but that deal later fell apart when the Hynix board rejected the offer.