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Sat, Aug 25, 2001 - Page 21 News List

US, Micron pressure Seoul over support for chipmaker

BLOOMBERG , WASHINGTON

The US is ratcheting up pressure on South Korea's government to stop supporting Hynix Semiconductor Inc, the world's third-largest memory-chip manufacturer, warning that it may bring a case to the WTO.

Idaho-based Micron Technology Inc, the biggest US maker of the chips, may also file an unfair-trade complaint in the US against Korean subsidies for Hynix, which is staggering under debt more than four times greater than the company's market value.

US Commerce Secretary Donald Evans and Treasury Secretary Paul O'Neill wrote to the Korean government in recent weeks, saying the use of state funds to bail out Hynix violates trade rules. And four US senators wrote to Bush, calling for a WTO challenge.

"Hynix is directly benefiting from the government's largesse, for a company that has long been billions of dollars in debt could not possibly stand on its own in the competitive global industry without such help," wrote Idaho Senators Larry Craig and Mike Crapo and Utah's Orrin Hatch and Robert Bennett.

At issue is the intervention by banks partially owned by the Korean government that permit debt rollovers and new credits.

Without that help, the company would be forced into bankruptcy, the lawmakers and Micron Technology say. The US has voiced concern about unfair support to Seoul for more than a year.

Tim Geithner, former Treasury undersecretary for international affairs in the Clinton administration, said last October that Korea was violating the terms of its 1997 International Monetary Fund loan program by subsidizing Hynix.

Haeng-kyeom Oh, minister for economic affairs at the Korean embassy in Washington, said Hynix's creditors will decide whether the company survives, not the government.

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