Dark Clouds on Semiconductor Exports to US

The US officially announced, “We will investigate whether the Korean government provided a subsidy to the Korean semiconductor D-RAM companies. As US investigates the Korean semiconductor field after EU, ‘Trading pressure’ has increased in the field.

According to the ministry of foreign affairs and trade(MOFAT) and the ministry of Commerce, Industry and Energy(MOCIE) on November 22, US Department of Commerce announced on November 21 (local time), “We accepted a lawsuit of Micron Technology, and so we will investigate whether the Korean government provided the subsidy to Samsung Electronics and Hynix.”

The products subject to the investigation included D-RAM semiconductor produced by the above two companies in Korea. The investigation period was 18 months from January 2001 to June 2002. However, Products produced in USA were excluded in the investigation.

In relation to the subsidy for investigation, there were R&D allowance and the financial supports such as Syndicated Loan and debenture acquisition of the financial institution to solve the financial problem for Hynix. Also, Samsung Electronics got the tax reduction and R&D allowance based on the limited law for a special case of tax.

International Trade Committee (ITC), USA will plan to make a preliminary decision on whether Micron was damaged owing to an export of the Korean D-RAM in the middle of the next month. When ITC makes the preliminary decision, US Department of Commerce will make the preliminary decision late in January, 2003. Also, the final decision of the US government will be made in May, 2003.

If the US imposes a countervailing duty after considering the subsidy payment of the Korean government, Korea will receive severe blow to the export of the semiconductor. The export of D-RAM to US amounted to USD 1,560 million last year. It occupied 45.5% of the semiconductor exports to US.

The Korean government decided to organize the measure team of the government and private companies participated by the related ministries and companies’ officials and to cope with such investigation actively.

Samsung Electronics repelled, “The lawsuit of Micro doesn’t have a reliable source. We have never received the government’s subsidy.”

Hynix said, “The financial support decision of creditors is based on a self determination of creditors. We have never received a subsidiary of the government. Accordingly,, we will bring our position through ministry of foreign affairs.”

Ja-Ryong Koo Joong-Hyun Park bonhong@donga.com sanjuck@donga.com