US hits Hynix with 45% DRAM duty

Punitive tariff decided and applied

The US government has begun levying a punitive 44.71 per cent duty on every DRAM product Hynix imports into the country.

Hynix CEO E J Woo condemned the imposition of the tariff as an "outrageous act aimed at a hidden agenda".

The duty is less than the 57.4 per cent originally suggested by the Department of Commerce after it investigated allegations that Hynix had received $11.7 billion worth of illegal subsidies from the Korean government found the memory maker guilty as charged.

By receiving financial support from creditor banks owned in part or wholly by the Korean government, Hynix was in violation of World Trade Organisation regulations, the investigation concluded.

Hynix maintains it has done nothing wrong, and is taking the line that it's the victim of a battle between the US and Korean governments.

"It was absolutely clear from the facts of this case that these subsidy levels are unjustified and illegal," said Woo in a statement. "The only possible explanation is that the DoC has decided to use this case to pressure the Korean government on the question of economic restructuring."

Just because the government still owns shares in some commercial banks, he argues, doesn't mean the activities of those banks amounts to government subsidy. Plenty of banks with no ties to the Korean government participated in the rescue financing that lead to the subsidy claims, he added.

Micron would naturally have preferred its troubled rival to have been declared bankrupt, and there's no doubt that its initial complaint to the DoC was made because Hynix was not allowed to collapse. Woo said such a US-style approach - just letting the company go under - was not "the way to handle troubled companies. Most of the world, like Korea, tries to use creditor-led workouts to avoid unnecessary bankruptcies, which often lead to liquidation and huge economic dislocation".

Hynix is attempting to get the tariff quashed, or at least significantly reduced, by appealing to the US International Trade Commission. The ITC can reduce the duty if it can be shown that domestic memory makers - specifically Micron, the US memory maker that first asked the DoC to investigate Hynix - were not harmed by Hynix's subsidies. The ITC will hold a hearing next week to look into the matter, but a decision is not expected until late July or early August, Reuters reports. ®

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