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Fri, Jul 25, 2003 - Page 12 News List

Hynix loses trade ruling

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Hynix Semiconductor Inc, the world's third-largest maker of memory chips, faces tariffs of as much as 45 percent after a US trade agency found that exports from the South Korean company are injuring American competitors.

The 3-0 ruling by the International Trade Commission in Washington is a victory for Micron Technology Inc, the second-largest producer in a US$16 billion global market, in a dispute that Korea has called its most important trade issue with the US. Boise, Idaho-based Micron filed the complaint, and the US Department of Commerce last month determined that loans and guarantees to Hynix from lenders backed by the South Korean government amounted to illegal subsidies.

There is "real suspicion that Hynix has been helped by the South Korean government," said Hans Mosesmann, managing director of SoundView Technology Group who covers Micron.

"They would have been potentially out of business," without the help, he said.

South Korea disputes the Commerce Department's finding and has complained to the WTO, the global arbiter of commerce.

The ruling was the first of two today by the trade commission against an Asian nation. The commission, an autonomous agency that measures the impact of trade on US companies, also said catfish imports from Vietnam are injuring US farmers, paying the way for tariffs of 64 percent and raising tension between the two nations.

The Hynix decision by the commission was the fourth and final step in the US review process. John Greer, a commission spokesman, said the Commerce Department would receive the detailed finding early next month and make the tariff ruling.

"These actions validate that Hynix received billions of dollars in illegal subsidies, reaffirms that free trade must also be fair trade, and demonstrates our government's commitment to enforce trade laws," Micron chief executive Steve Appleton said in a statement.

Hynix attorney Daniel Porter said he was "a little bit surprised" by the decision. "I thought we had a pretty strong case," Porter said in an interview from his Washington office.

Still, Hynix has a factory in Eugene, Oregon, so the company can shift some production to that plant, avoiding tariffs. The company has invested US$1 billion in the Oregon facility and is planning additional improvements in the fourth quarter of this year, Porter said.

"It's really unclear what effect, if any, this will have in the marketplace," Porter said.

Hynix, which is also facing tariffs by the EU, was saved by a bailout organized in December by its main lender, Korea Exchange Bank.

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