No thanks for the memory

Last Friday, the US ITC determined that there was a ‘reasonable indication’ that the US memory chip industry had been affected by subsidised imports of DRAMs from Korea.

On Friday, the US International Trade Commission (ITC) determined that there was a ‘reasonable indication’ that the US memory chip industry had been ‘materially injured’ due to imports of DRAMs and DRAM modules from Korea that were ‘allegedly subsidised’.

The result must come as some relief to US-based Micron Technology who filed a countervailing duty (CVD) case on November 1 2002 with the US Department of Commerce and the International Trade Commission against DRAM semiconductor products manufactured in South Korea.

In filing its complaint, Micron identified multi-billion-dollar bailout packages and loan subsidies to South Korean semiconductor companies which, it said, were in violation of US Countervailing Duty laws and South Korea’s commitments under World Trade Organisation agreements. The subsidies, according to Micron, have included loan write-offs, debt-for-equity swaps, government-induced debt financings and re-financings on noncommercial terms, special export financing and special tax treatment.

Commenting on Micron’s filing, CEO and President, Steve Appleton, said at the time that, ‘The ongoing subsidisation of Korean DRAM manufacturers violates free market principles and has resulted in excess supply in the international market for DRAM products. Inefficient manufacturing operations should not be allowed to escape normal market forces. Korea has not kept its commitments to the World Trade Organisation and continues to violate US Countervailing Duty laws.’

As a result of the ITC’s determination, the US Department of Commerce will continue to conduct its countervailing duty investigation of imports of DRAMs and DRAM modules from Korea, with its preliminary determination due on or about January 27, 2003.

The US authorities will then decide how much damage that the US DRAM industry has sustained because of the memory subsidies. Once they have, the US could impose anti-dumping tariffs on Korean DRAM imports or countervailing duties.