The U.S. Department of Commerce (DOC) Tuesday said it plans to impose strict export fees on South Korean chipmakers after it found that the Korean government paid subsidies to make dynamic random access memory (DRAM) (define).

As previously reported, Boise, Idaho-based Micron Technology claimed South Korea gave multi-billion-dollar bailout packages and loan subsidies to Hynix Semiconductor (formerly Hyundai Electronics Industries) and Samsung Electronic including loan write-offs, debt-for-equity swaps, government-induced debt financings and re-financings on noncommercial terms, special export financing and special tax treatment.

In its ruling, the DOC said imports of DRAMS during the period of investigation (January 1, 2001 through June 30, 2002) were unfairly subsidized and it would begin to impose final import duties of 44.71 percent on Hynix pending a ruling by the International Trade Commission (ITC) next week. The amount is down from the 57 percent determination the DOC made during its preliminary investigation.

If the ITC makes a final determination that imports of DRAMS from Korea are "materially injuring, or threatening to materially injure, the domestic industry", the department said it would issue a countervailing duty order against Hynix starting in August.

Hynix also faces a preliminary duty of 33 percent on its DRAM chip exports to the European Union. That complaint was raised by German DRAM maker Infineon

Last year, South Korea made $14.3 billion in overseas DRAM sales, making the memory chips the country's biggest export. Sales from South Korea to the United States and Europe represent 17.5 percent of semiconductor exports.

InStat/MDR director and principal analyst Steve Cullen said he expects the ITC to follow suit, which he says basically prices Hynix out of the American market.

"The trend for moving chip production from the U.S. to Asia has been true in every area except DRAMS," Cullen said. "Roughly 40 percent of the DRAM market comes from America and Europe makes up 20 percent. Orange County is just one hot spot of DRAM culture. Manufacturers can make the chips here and not worry about the overhead because the cost of the parts makes up for it."

Hynix CEO E.J. Woo condemned the decision calling the ruling an "outrageous act aimed at a hidden agenda."

Woo's thought was that the DOC blindly concluded that the Korean Government must have been secretly involved in the financial restructurings of Hynix simply because the Korean Government still owns shares in some commercial banks.

A spokesperson with the DOC told internetnews.com that the tariffs were based solely on Micron's claims and that a public commentary would be filed in the Federal Register after the ITC issues its decision.

Micron spokesperson David Parker said the company is pleased with the DOC's ruling.

"This determination validates our view that Hynix has received illegal subsidies, and that appropriate duties should be applied. We believe that these subsidies have caused significant injury to the industry and we look forward to the final determination by the International Trade Commission," Parker said in a statement.

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