Asian DRAM firms may face dumping charges in Europe
By Jack Robertson
WASHINGTON -- Asian chip makers are facing potential new DRAM dumping charges in Europe.
A top executive of Siemens A.G.'s semiconductor unit said the European Electronic Components Association (EECA) is collecting preliminary data that could lead to the filing of an official dumping complaint against producers in South Korea, Japan, and Taiwan within a month.
DRAM dumping by Asian companies last year caused a disastrous decline in prices, according to Andreas von Zitzewitz, president of Siemens Semiconductors' memory products division based in Munich, Germany. "Now it appears that the game is opening up again, and DRAM prices are falling once more," he added.
The ECCA is doing an analysis of DRAM pricing that could lead to a formal complaint with the European Commission in Brussels before the end of April, Zitzewitz said. Participating in the preliminary probe are Siemens and two ECCA members based in the United States: IBM Corp. and Texas Instruments Inc.
Ironically, the EC this week agreed to end an earlier DRAM dumping case against Japan and South Korea after the two countries agreed to set up a "fast-track" system of keeping production cost data. That data is supposed to be accessed quickly in the event of a dumping complaint. The fast-track procedures would get an immediate test if the ECCA followed through with a new suit.
Two South Korean chip makers are facing possible DRAM dumping penalties under a six-year-old U.S. case brought by Micron Technology Inc. of Boise, Idaho. In an preliminary decision earlier this month, the U.S. Commerce Department hit Hyundai Electronics Industries Co. Ltd. with duties of 12.66% and LG Semicon Co. Ltd. with duties of 7.61% (see March 3 story). Samsung Electronics Co. Ltd. was dropped from the U.S. case five years ago.
DRAM producers in all three Asian countries, but especially in South Korea, continue to build capacity without regard to production costs, according to Von Zitzewitz.
"South Korea already has tremendous capacity in DRAMs, yet they are continuing to expand production," he said. He said that South Korean companies that have cut back recently on projected new fabs have simply switched to increasing output through technology upgrades of existing lines.
The Siemens executive also echoed the concerns of Micron and the U.S.-based Semiconductor Industry Association that the South Koreans were using subsidies from the government and banks to finance their fab expansions. He supported the U.S. chip industry's demand that no global bailout money end be used to continue expansion.
He charged that the South Koreans deliberately targeted DRAM at markets outside their country. "This overloaded the global market, causing severe price erosion in DRAMs," he said. "It only ended up taking cash out of everybody's pocket."
Von Zitzewitz said DRAM dumping is continuing this year. He said 16-Mbit DRAMs, which had recovered slightly to between $3 and $4 each in January have again fallen to between $2 and $3. "Pricing once again is back in very dirty corners," he said. "We now think it is reasonable to gather data on dumping to take appropriate action."
Any new EC dumping case related to DRAMs would come on the heels of two separate long European dumping suits against Japan and South Korea that have just ended. The EC originally set various DRAM floor prices for producers in the two countries. These rates were suspended in the three years through 1996 when DRAMs in global markets were in short supply and prices shot up. The EC re-instituted the DRAM floor price procedures early last year when the memory market nose-dived.
Sources said they believed that the EC floor prices, which are kept confidential, generally reflected market rates. The EC then agreed to drop the DRAM cases when chip makers in Japan and South Korea agreed to the fast-track data compilation system. A European chip marketer who asked not be identified wondered if anyone had predicted that the fast-track system would be needed so soon after the two old cases were settled.
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