Feeds

Micron demands WTO declare Hynix rescue actionable

Claims plan is an unwarranted government subsidy

  • alert
  • submit to reddit

Bridging the IT gap between rising business demands and ageing tools

Micron will seek the US government's help in blocking rival memory maker Hynix's $7 billion rescue plan, the company confirmed yesterday.

The memory maker said it will ask the US' representative at the World Trade Organisation and the US Treasury Department to file a complaint with the WTO. That filing will claim that the Hynix bailout amounts to unwarranted state aid and a violation of WTO regulations.

Essentially, the WTO maintains that governments should not subsidise businesses if that aid adversely affects overseas companies from competing with the subsidised business, either within its own national market or through exports. The WTO defines such an "actioable" subsidy as "a financial contribution by a government (or any public body within the territory of a member [state]) which confers a benefit".

It's up to complainants to show that a subsidy has an adverse effect on competition. If they do so successfully, the WTO can demand the subsidy be rescinded or that its "adverse effects be removed". Failure to do so grants the complainant the right to impose import restrictions on the subsidised company's products.

Hynix would arguably be unable to continue trading without the rescue plan, and with the memory market in such a dire state, extra tariffs on its exports would reduce even further what little money is coming into the company.

Micron has been arguing for some time now that as many of Hynix's creditors, such as the Korea Exchange Bank and the Korea Development Bank, are largely owned by the Korean state, their efforts to keep the debt-laden memory maker afloat are tantamount to government subsidy, contrary to WTO rules.

"These banks can make improper financial restructuring of Hynix because they have the government money behind them," claimed Micron's government affairs manager, Amy Kleiner, according to an EBN report.

The report also says that, at a meeting of the WTO's committee on government subsidies held yesterday in Geneva, objections were raised to the rescue plan by US, EU, Singaporean and Japanese delegates.

Last week, NEC, Hitachi, Toshiba and Matsushita asked the Japanese government to investigate their allegations that Hynix (and Samsung) had been dumping DRAM onto the Japanese market. Selling product below cost price in order to gain market advantage is illegal. The four companies' complaint may now be extended to include Hynix's rescue plan.

That scheme, agreed at a creditors meeting yesterday, will see Hynix offered further loans to the tune of one trillion won ($776 million). The creditors will also increase the previously agreed debt-for-equity swap by one trillion won to four trillion won. Repayment will be extended on another four trillion won of debt. ®

Related Stories

Creditors OK $7bn Hynix rescue plan
Matsushita, Hitachi back NEC ,Toshiba DRAM dumping charge
Hynix bail-out plan sets Micron a-grumbling

Build a business case: developing custom apps

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
prev story

Whitepapers

Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.