TOKYO Japan's Ministry of Finance on Friday (Jan. 20) imposed countervailing duties totaling 27.2 percent on DRAMs manufactured by Hynix Semiconductor Inc. The tariffs are a response to alleged Korean government subsidies to Hynix.
Japan's first countervailing duties will take effect immediately after the ministry's recommendation is approved by the cabinet, reportedly on Jan. 27.
Elpida Memory Inc. and Micron Japan Ltd. sought the penalty in June 2004, claiming Hynix received $11.86 billion in illegal government subsidies during 2001 and 2002. Tokyo launched an investigation in August 2004 that was scheduled to be concluded by Feb. 3.
The move was expected since the government said in October 2005 that it had arrived at a figure of 27.2 percent as the level of import duty to be levied on DRAM chips made by Hynix. Since then, Japan and South Korea have been negotiating a settlement. The talks ended in a stalemate.
"If a company does business with subsidies, it is unfair to other companies," said a Ministry of Economy, Trade and Industry official. "Japan decided that there was subsidizing [by the Korean government] and decided the duty following its rule."
In Seoul, the Ministry of Commerce, Industry and Energy released a statement Friday critical of the Japanese duties against Hynix. "We have expressed strong regret against the Japanese government's final decision on this issue, worrying about that the move could adversely affect the relationship between the two countries, not only in the semiconductor sector, but also in the overall bilateral trade and industrial cooperation," the ministry said.
The duty can be only imposed on Hynix DRAMs imported from South Korea. A Hynix executive said it can still supply DRAM products duty-free from its U.S. fab, from a subcontracting foundry in Taiwan or even from China.
Japanese manufacturers recognize the loophole, which makes it difficult to compensate for Hynix's cost advantage. Even so, they welcomed the government's hard-line stance against Hynix.
Japan's move has fueled concerns about a broader trade dispute between South Korea and Japan. South Korea has also said it plans to take the DRAM case to the World Trade Organization (WTO) as it did Europe and the U.S., the reports said.
Although the U.S. and Europe imposed higher tariffs, at 44 and 33 percent, respectively, the relatively low volume of DRAM-intensive manufacturing in those locations, particularly in Europe, dampened the impact of the tariffs.
Hynix is reportedly considering legal action in Japanese courts.
The U.S. and Europe imposed tariffs in the 44.7 percent and 33 percent ranges, respectively, although they were contested by South Korea. The WTO overturned its own ruling against the U.S. tariffs in June 2005, apparently giving Japan a green light to press its case against Hynix.
Peter Clarke in London and Sean Shim in Seoul contributed to this report