Hyundai, LG Semicon Shares Fall After U.S Chip Dumping Ruling
Bloomberg News
September 9, 1998, 6:40 p.m. PT
Hyundai, LG Semicon Shares Fall After U.S Chip Dumping Ruling
Seoul, Sept. 10 (Bloomberg) -- Hyundai Electronics
Industries Co. and LG Semiconductor Co. shares fell after the
U.S. Commerce Department ruled the two companies sold computer
memory chips in the U.S. at unfairly low prices.
The ruling may lead to a 9.28 percent duty on LG Semicon
exports of some computer chips to the U.S. and a 3.95 percent
tariff on Hyundai Electronics.
Hyundai shares dropped 1.31 percent to 30,100 won and LG
Semicon fell 4.25 percent to 10,150.
The final judgment by the department's International
Trade Administration, which follows a preliminary ruling in
March, covers most dynamic random access memory (DRAM) chips,
the standard memory chip in the current generation of
semiconductors used in computers and a broad array of
electronic products.
The two companies, along with Samsung Electronics Co.,
are the largest producers of computer chips in Korea, the
world's biggest producer of the devices, which are key to
production of virtually all electronic goods. The ruling
relates to more than $400 million in Korean exports in 1996
and 1997.
Companies Protest
Daniel Lee, general manager of LG Semiconductor America
in San Jose, California, said the Commerce investigation was
flawed because the determination of ''dumping,'' the practice
of selling below fair value to gain market share, was based on
data that included sales by ''unrelated third parties.''
''We at LG Semicon were completely unaware of these
sales,'' said Lee. ''These sales were not made by LG Semicon,
nor were they authorized by LG Semicon.''
Because of its flawed methodology, the department's
ruling is ''neither fair nor supportable under U.S. law.,'' he
said.
''The ITA's final decision lacks any legal or factual
basis and we are confident it will be overturned by the (U.S.)
Court of International Trade'' in New York City, said Lee. The
company plans to file a protest with the court shortly, he
said.
Hyundai Electronics spokesman Pang Min Ho said the
company is considering protesting the decision which will
affect imports shipped between May 1996 and April 1997.
''Looking forward, we feel we have solved the dumping
problem with the recent opening of our factory in Oregon,''
said Pang. ''The factory will produce 90 percent of Hyundai's
DRAM chips.''
Dumping Margins
The proposed duties are intended to reflect the margin
below ''fair value'' at which chips produced by the two
companies are sold in the U.S. Fair value is determined based
on production costs, and the cost of chips in their home
market.
The International Trade Commission, a separate and
autonomous U.S. government agency, must now make its final
determination of whether the alleged dumping of memory chips
by the two companies poses a real or potential threat to U.S.
chipmakers, including Micron Technology Inc. of Boise, Idaho,
and Texas Instruments Inc. of Dallas, Texas.
If the ITC determines injury or potential injury to U.S.
companies -- and that ruling should come within the next 60
days -- the punitive tariffs will be imposed retroactively for
the 12 months starting in May 1996.
LG Semicon exports about 10 percent of its total output
to the U.S., while Hyundai exports about 40 percent of its
chips to the U.S.
Samsung Electronics, the largest producer of DRAMs and
other computer chips in Korea and the world, isn't affected by
the charges. Samsung adjusted its U.S. export prices and
practices to satisfy the terms of a 1992 anti-dumping
decision.
The ruling could force the Korean companies to pay a
punitive tariff on the earlier period and post a bond for the
period going forward, which will act as a clear deterrent to
such practices in the future.
DRAM prices in the U.S. have tumbled in the last two
years, partly due to the cyclical nature of the industry but
also because of the devaluation of Asian currencies, including
the Korean won. Prices for 16-megabit DRAMs currently range
between $1.80 and $2.00 while prices for 64-megabit DRAMs
range between about $8.50 and $10.50. That represents a
decline of roughly 95 percent over the last two and a half
years.
Hyundai controls about 8 percent of the global
semiconductor market, LG Semicon about 4 percent and Samsung
about 14 percent. Micron and Texas Instruments control about
10 percent and 7 percent, respectively, according to a recent
report from de Dios & Assoc. The U.S. is the world's largest
semiconductor market. |
