U.S. Imposes Duties on Taiwan Dram Imports at Micron's Request
U.S. Imposes Duties on Taiwan Dram Imports at Micron's Request
Washington, May 24 (Bloomberg) -- The U.S. levied tariffs of up to 31 percent on Taiwanese dynamic random-access memory chips, marking another victory for Micron Technology Inc., the last remaining U.S. memory chipmaker, over its foreign rivals.
The Commerce Department's preliminary tariffs include a 30.9 percent penalty on chips made by Mosel Vitelic Inc. and a 10.36 percent duty on those shipped by Vanguard International Semiconductor Corp., among the 11 companies hit with the tariffs. The duties on the chips, which are used in everything from cellular phones to cars, may be revised before they are collected.
Idaho-based Micron Technology accused the Taiwanese companies of ''dumping'' in the U.S. market, or selling here at prices below production cost. The company, one of the world's three biggest memory chipmakers, has also used U.S. trade laws to get duties imposed on chips imported from South Korea. ''We're happy with the decision,'' said Amy Kleiner, a Micron spokeswoman. ''The (tariffs) reflect the significance of the dumping from Taiwan. It should discourage that kind of activity.''
The ruling comes as Dram prices have plunged by about half since January because of slow demand and increased output. While the duties may help slow the fall in prices, they won't halt it because Taiwan isn't a big enough producer, said Joseph Osha, a Merrill Lynch & Co. senior analyst in New York.
Helping at Margin ''Anything they do to the Taiwanese instead of the Koreans will help at the margin, but it won't be enough to stop spot prices from going on,'' said Osha who has an ''accumulate'' recommendation on Micron, the second-highest of Merrill Lynch's five ratings for stocks.
Taiwan exported $427 million worth of Drams to the U.S. in 1997, the Commerce Department said.
These chips now cost about $5 each, down from $10 in January. Many analysts expect prices to fall further because demand for personal computers -- which consume about seven-tenths of Dram output -- won't pick up until August or September.
The U.S. also singled out imports from Nan Ya Technology Corp., which will face 9.03 percent duties, and Etron Technology Inc., which will be subjected to 4.96 percent duties. Winbond Electronics Corp., Acer Semiconductor Manufacturing Inc. and all other companies were levied with 16.65 percent tariffs. ''The ruling is not a good thing for Taiwan,'' said Jesse Chou, a Vanguard spokesman, before the duties were announced. ''It'll make Taiwanese chips less competitive in the U.S. and force companies to change their marketing strategy.''
Slowing Industry
The U.S. Commerce Department will set final duties in October. After that, the International Trade Commission, an autonomous government agency, must find that Taiwanese Drams harmed the U.S. industry if the duties are to be collected.
Taiwan's chipmakers are face a slowing industry. They exported products last year worth NT$300 billion ($9.1 billion), of which one-third went to the U.S., according to Taiwan's Ministry of Economic Affairs.
The island contributes about one-tenth of global Dram output, exceeded only by rivals in the U.S., Japan and South Korea.
With the fall in prices, Dram makers worldwide filed numerous charges of dumping and anti-competitive practices after a burst of capacity expansion in 1994 and 1995 led to a supply glut and plunging prices. The problem was worsened by the devaluation of many Asian currencies in 1997. Worldwide sales of the chips -- which has increased by volume -- fell to $14 billion last year from almost $41 billion in 1995, Osha of Merrill Lynch said.
Taiwan Strikes Back
In April, Taiwan's Dram companies filed a complaint with the island's own International Trade Commission accusing Micron, Texas-based Samsung Austin Semiconductor and Hyundai Electronics America of dumping chips on the island. The Taiwanese companies, are seeking duties of between 46 percent and 75 percent. ''Micron will eventually become one of the few producers that survive this shakeout,'' said Osha. ''More and more companies are unwilling to lose money on this industry.''
Last December, the U.S. won a World Trade Organization dispute involving anti-dumping tariffs it imposed on Dram makers in South Korea.
Prices of the 64-megabit Drams, the industry standard, ''will extend their slides through the third quarter, though at a slower pace,'' said Andrew Lu, a semiconductor analyst with Credit Suisse First Boston in Taipei. ''Vanguard, Nan Ya and Mosel will likely lose between NT$1 billion and NT$1.5 billion each this year.''
Limited Impact
Still, the ruling may have only a limited impact on some companies. ''It means almost nothing to us,'' said Hander Chang, an assistant vice president at Winbond. ''Less than 10 percent of our sales comes from the U.S. Micron filed the complaint because it wants to impede the growth of Taiwan's Dram industry.''
Winbond, which pays Japan's Toshiba Corp. for chipmaking technology, sells four-fifths of its products to Toshiba. Taiwan- based Powerchip Semiconductor Corp. ships half its chips to Mitsubishi Electronics Corp.
In nine weeks, shares of Winbond fell 8.6 percent and Mosel slipped 13 percent as investors worried that falling chip prices and the anti-dumping ruling will lower earnings. Today, Winbond was little changed at NT$38.20 and Mosel rose 2.4 percent to NT$30.10.
Taiwan companies can also sidestep the ruling by selling Dram chips with computer motherboards because the complaint filed by Micron is for chips only.
Other companies named in the U.S. anti-dumping case include Taiwan Semiconductor Manufacturing Co., United Microelectronics Corp. and Utek Microelectronics Corp.
Micron shares fell 15/16 to 36 3/8 in recent trading. |
