The Commerce Department Tuesday announced in a final ruling that it has imposed a 44.71% countervailing duty on DRAMs imported into the United States by Hynix Semiconductor Inc. because of what it said were illegal subsidies granted to the chipmaker by the Korean government.
The tariff is slightly lower than the 57.37% preliminary penalty that Commerce imposed in April. The complaint was filed last November by Micron Technology Inc., Boise, Idaho, and charged that the Korean government directed the bailout of financially-troubled Hynix and funneled $11.7 billion into the company through government-controlled banks during an 18-month period from January 1, 2001 through June 30, 2002.
Hynix must now post bond or make deposits into an escrow account until the U.S. International Trade Commission makes its final ruling, tentatively set for July 23, as to whether the U.S. DRAM industry has been injured by the Hynix actions.
If the ITC, which shares jurisdiction with Commerce in the case, finds there was injury, then the 44.71% duty will be imposed on all Hynix DRAMs, effectively blocking imports into the United States. If the ITC finds there was no injury, the case will be dropped.
Hynix has maintained that the duty won't upset its DRAM sales to U.S.-based customers. Since the preliminary penalty tariff was levied in April, the company said it has had the ability to transship DRAM to plants outside the country or ship directly to customers in the United States from its fab in Eugene, Ore., which isn't affected by the duty.
"We are very disappointed in the decision. Hynix is confident that the International Trade Commission will find the U.S. DRAM industry was not injured and this penalty will be removed," said Farhad Tabrizi, vice president of worldwide marketing for Hynix. "The extra tariff will only hurt U.S. manufacturers and encourage them to move more manufacturing outside the U.S."
A Micron spokesman said the ruling "validates our view that Hynix received illegal government subsidies and the appropriate duties should be applied against the firm. We look forward to the final determination by the ITC on injury to the U.S. DRAM industry."
Samsung Electronics Co. Ltd., which also was named in Micron's original complaint, was effectively cleared during the case when the 0.04% duty it was assessed was considered to be too small to enforce.
The bond or escrow deposits Hynix has been forced to make, however, were considered a large enough concern that the Korean government asked the Commerce Department to suspend them in return for establishing a sharply lower quota for Hynix DRAMs shipped into the United States. Talks to suspend the payments broke down when Commerce last month rejected the offer.
The U.S. action against Hynix parallels a similar case in Europe, where the European Commission has levied its own preliminary 33% countervailing duty against Hynix, also for accepting allegedly illegal government subsidies. The EC is expected to make its final ruling in late August.