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Taiwan's DRAM makers prepare for Micron's anti-dumping suit

Harsh competition in memory biz about to get harsher

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US memory maker Micron is unlikely to take legal action against its Taiwanese rivals for alleged product dumping.

So said Taiwan Semiconductor Industry Association president Gordon Chen this week, but he was sufficiently sure that there is a chance Micron will sue to warn the company that such a move will not go down at all well in Taiwan.

Taiwan's memory manufacturers are meeting today to discuss how they might respond if Micron takes legal action. The TSIA, their umbrella organisation, is also meeting with Taiwan's Board of Foreign Trade, part of the Ministry of Economic Affairs.

The threat of such measures was raised by Micron last month. Micron also threatened Korean DRAM producers. Essentially, it is accusing overseas manufacturers of selling DRAM in the US for less than it costs to make. Such action is technically illegal, since it's regarded as unfair competition - it has often been employed by companies keen to muscle in on markets, using their ability to absorb a loss to beat rivals that can't.

In claiming that's what Taiwanese and Korean DRAM manufacturers are up to, Micron seems to be disregarding the prevailing conditions in the memory business. Prices are so low, many observers wonder how any of the memory manufacturers can be making money. Enough of them are reporting losses, Micron included.

Micron's allegations may, therefore, be difficult to prove. That won't stop Micron, which appears to be using the law as much as a stick to beat its competitors as anything else. Earlier this week, the company said its goal was to be the "last man standing" after the harsh business environment has taken its toll on lesser memory makers. Its threatened legal action would certainly make matters tougher for its overseas rivals.

However, it might also have a positive effect. Any attempt to limit overseas DRAM makers' ability to sell memory into the US would limit supply and thus boost demand. That, in turn, would put some upward pressure on memory prices. It might also persuade them to cut production capacity, something that would do the business no harm at all.

Rumours suggest Micron will target Hynix first, which would imply the move is an aggressive one rather than an attempt to stabilise DRAM prices. Suing Hynix right now would certainly have the air of kicking the competition when it's down. Hynix's survival depends on getting its credit line extended with the banks to whom it already owes so much money. Legal action from Micron might just persuade the creditors that Hynix can't be saved. ®

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