Fri, Apr 25, 2003 page11

• Hynix faces 33% tariffs in the EU

  COMPLAINT The European Commission's decision against the South Korean memory-chip maker follows a similar decision by the US Commerce Department

  • BLOOMBERG
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  The European Commission will levy 33 percent tariffs on memory chips sold by Hynix Semiconductor Inc, the world's third-largest maker of computer-memory chips, after backing a complaint by a rival that the South Korean company benefited from unfair subsidies, lawyers for Hynix said.

  The tariffs, which the lawyers said were due to be announced yesterday, follow a complaint by Germany's Infineon Technologies AG about alleged subsides given to Hynix in 2001 that helped it to export US$307 million in chips to Europe.

  European Commission spokeswoman Arancha Gonzalez and her assistant declined to comment.

  European tariffs would come after a preliminary decision by the US Commerce Department to levy a 57 percent tariff on Hynix exports. The US ruled April 1 in favor of a complaint from Boise, Idaho-based Micron Technology Inc, the world's No. 2 maker of computer-memory chips, that government-backed lenders in South Korea had unfairly subsidized Hynix.

  "The Korean government has been put on notice not to subsidize its semiconductor producers," said Rich Whittington, an analyst at American Technology Research who rates Micron shares "buy" and doesn't own them. Whittington doesn't cover Hynix.

  Competitors in Europe, the US and Taiwan complain that South Korea's financial support for the chipmaker has cost them sales.

  Last week, Nanya Technology Corp (南亞科技) said it and three rivals will also seek tariffs on imports from South Korean chipmakers. The four Taiwanese companies, which account for a fifth of the US$16 billion global memory-chip market, will petition the government in three weeks to impose duties, Nanya vice president Charles Kau (高啟全) said.

  Companies that will sign the petition include Mosel Vitelic Inc (茂矽電子), Powerchip Semiconductor Corp (力晶半導體) and Winbond Electronics Corp (華邦電子), Kau said.

  Hynix's creditors have bailed the company out three times in the past two years, rolling over billions of dollars of debt the chipmaker racked up to invest in the latest production equipment.

  Hynix argued that European industry will suffer from the duties, since Infineon can't supply the variety of DRAM chips manufactured by Hynix and doesn't supply directly to smaller customers. It added that makers of telecommunications and consumer electronics can't use chips from Infineon, which are designed for use in personal computers.

  "Other foreign chip suppliers will be the beneficiaries,"said Jean-Francois Bellis, a Brussels-based lawyer at Van Bael & Bellis, which represents Hynix.

  "They will cause damage to customers and force industry out of the EU," he said.

  Micron spokesman Sean Mahoney said the company would only comment once the European Commission announces its plans.

  Supply of so-called dynamic random access memory, used to store data while a PC is turned on, has exceeded demand for more than four years as businesses and consumers have curbed purchases, Whittington said.

  "Removing or raising the price on one supplier in an oversupplied market won't have much of an effect," Whittington said.

  Samsung Electronics Co , the world's No. 1 maker of DRAM chips, would be the most likely beneficiary of the tariffs, especially if PC sales began to grow, he said.
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