Elpida seeks tariffs on Hynix DRAMs

@ 2004/06/17
Wednesday June 16, 6:17 am ET

(Adds analyst comments, background)
TOKYO/SEOUL, June 16 (Reuters) - Japan's Elpida Memory Inc said on Wednesday that it and the Japanese unit of Micron Technology Inc (NYSE:MU - News) have asked the Japanese government to impose duties on imports of DRAM chips made by South Korea's Hynix Semiconductor Inc (KSE:000660.KS - News).

An investigation by Elpida and Micron Japan had led them to believe that Hynix had received subsidies from the South Korean government, and that imports of its cheap DRAMs have damaged the domestic industry, the Japanese chip maker said.

The action, which sent Hynix shares down 4.09 percent to 10,550 won, follows decisions last year by the United States and the European Union (News - Websites) to impose steep duties on DRAM chips made by Hynix.

Hynix, the world's fourth-largest DRAM maker with market share of 14.7 percent in 2003, said that it had not received any unfair subsidies or help in breach of World Trade Organisation rules.

"Japan's investigation is particularly unreasonable and unwarranted at this time when the world DRAM market has been showing a continued strong performance since 2003," Hynix said in a statement.

"It is simply inappropriate to begin a new investigation now, when the same actions by other countries have been challenged in the WTO by Korea and are likely to be found legally defective soon," it added.

The latest spat between Japanese and South Korean technology companies comes on the heels of patent disputes between Fujitsu Ltd (Tokyo:6702.T - News) and Samsung SDI Co Ltd (KSE:006400.KS - News), the world's top plasma display panel makers.

The two companies earlier in June reached an agreement to drop their lawsuits filed against each other on alleged patent infringements.

Little immediate impact on the supply/demand balance in the Japanese DRAM market is expected from the Hynix spat since it will take about two months for the Japanese government to decide whether to investigate the matter and up to one year to complete its investigation, analysts said.

"This is not the first case of this kind for Hynix. So, PC makers and other Hynix users in Japan have already secured multiple supply sources," Lehman Brothers analyst Satoru Oyama said.

"Today's event, however, may scare them a little and prompt them to boost the ratio of supplies from other sources," he said.

The European Union last August imposed anti-dumping duties on Hynix of 34.8 percent, while the United States imposed duties of nearly 45 percent on the company last June after a petition by Micron Technology.

Elpida, which has been called Japan's last hope for standard computer memory chips in an industry dominated by nimbler rivals in South Korea and Taiwan, is a joint venture between Japanese electronics makers Hitachi Ltd (Tokyo:6501.T - News) and NEC Corp (Tokyo:6701.T - News).

It is the world's sixth-largest DRAM maker and held 4.3 percent of the $17 billion global DRAM market in 2003, according to research firm iSuppli.

Elpida plans to spend up to $4.5 billion to build one of the world's largest DRAM chip factories in a bid to challenge market leaders such as Samsung Electronics Co Ltd (KSE:005930.KS - News).

Comment from Sidney @ 2004/06/17
I smell further price dropping for DDR; market always look ahead 6 months.