Micron Suit Spurs Wide Shock Waves
From Page One of Electronic News: November 2, 1998 Issue
By Peter Brown
San Jose--Micron Technology's latest anti-dumping petition against Taiwan threatens to damage a wide number of memory companies outside that country. Fabless U.S. semiconductor companies and Japanese and European firms using Taiwanese foundries are among those at risk of being slapped with sanctions as a result of Micron's complaint.
Micron's petition with the U.S. Department Of Commerce (DOC) and the International Trade Commission (ITC) alleges that Taiwanese companies are importing DRAMs into the U.S. at prices that are lower than the cost of manufacturing, and that these imports are causing material injury to U.S. DRAM producers.
But fabless U.S. firms who buy DRAMs from Taiwan are crying foul, claiming it would unfairly subject them to sanctions that were really intended to protect domestic firms from unfair foreign competition.
"We are a classic Silicon Valley start-up, incorporated in Delaware, that employs U.S. citizens," said Gary Fisher, executive VP in the office of the president and CFO at Integrated Silicon Solutions, Inc. (ISSI), Santa Clara. "Because we use foreign foundries to manufacture our chips we are treated in these cases as a foreign company that is hurting America and taking jobs away from the country."
Mr. Fisher said the anti-dumping law in the U.S. focuses on the source of the wafer, not where the company selling it is headquartered. That puts the entire fabless business model in the U.S. at the mercy of the DOC and ITC, he noted.
"Should we carry the same burdens as foreign-based countries?" asks Mr. Fisher. "We want an even playing field and the ability to use any sort of manufacturing company we want without being penalized for that. That is capitalism, that is what this country is founded on. The rules need to be modified."
"Micron is trying to drive out the DRAM business in the U.S. and trying to create a monopoly domestically," said N. Damodar Reddy, chairman, president and CEO, of Alliance Semiconductor, San Jose. "In order to make money, I have to do this overseas. Micron is using their muscle to kill companies who are doing a fair business. We are very small in the DRAM market so why would they include us as a player if they didn't want a monopoly? We are so small that we are not a threat."
Mr. Reddy said an earlier anti-dumping complaint by Micron hurt U.S. companies selling SRAMs . ISSI, G-Link, Alliance Semiconductor and other small memory companies were hit with dumping penalties on SRAMs (EN, March 16). Japanese and European conglomerates might get hit by Micron's complaint as well. Most Japanese companies have moved their 16MB production to Japan. Toshiba uses Winbond to build a substantial number of its 64MB DRAMs, as much as half by some estimates (Toshiba declined comment). Mitsubishi has a memory joint venture in Taiwan. Siemens, meanwhile, may be vulnerable because of a joint venture the company has with Mosel Vitelic.
Although only 3 percent of the total world's DRAMs is sold under the names of Taiwanese companies, a much greater portion of the market is produced by Taiwanese fabs for Japanese and European firms, said Steve Cullen, senior analyst at Cahners In-Stat Group, a research firm based in Scottsdale, Ariz.
"Because of the currency devaluation and prices for DRAM declining over 95 percent, we see plenty of oversupply in the market," said a Micron spokeswoman. "We believe the Taiwanese DRAM manufacturers are importing into the U.S. DRAM modules and DRAM chips and selling them for less than what it takes to manufacture the parts."
"Micron has not cut costs like a lot of the DRAM manufacturers, and it's harder for Micron to ride out a DRAM cycle like this because they are smaller than most DRAM companies," said Mr. Cullen. "Most of these other companies can make money doing other things but if Micron doesn't make money on DRAMs they're in trouble. So they figure if the law is there why not use it."
The Department of Commerce will decide if it wants to pursue any action in the next 15 days. If it elects to pursue the complaint, then the FTC will investigate if any U.S. companies have been hurt. Earlier this year, Taiwanese and Korean companies were found to have been dumping SRAM memory parts from the period of 1996 through April 1997. That complaint was also brought against the countries by Micron. Recently, Korean manufacturers LG Semicon and Hyundai Electronics were found to have been dumping DRAMs from the period of May 1996 through April 1997.
A spokesman for TSMC said since the foundry does not sell DRAM chips and does not have an inventory of devices, the company is not faced with sanctions. UMC, which did not return phone calls, may be in a different boat since the company does have dedicated subsidiaries that do manufacture and sell DRAM devices.
One of the more interesting aspects of the dumping complaints comes from the agreement between Texas Instruments and the Acer Group that involves Acer supplying TI with DRAM parts through end of the year. Since Micron purchased the DRAM business from TI last month for $880 million (EN, Oct. 5) it's unknown if Acer will be named in the dumping suit. |
