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Hynix, STMicro plot Chinese DRAM JV

Tackling China's chip tax?

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Hynix and STMicroelectronics are negotiating on the creating of a joint venture that will see the two memory makers build a DRAM plant in China, representatives of the South Korean manufacturer said this past Friday.

Little is known about the plan, other than it will churn out Flash memory in addition to DRAM.

The two companies began working together last year. In April 2003, the duo announced they would co-operate on a single entry into the NAND Flash market.

The Chinese plant has benefits for both companies. For a start, it provides access to the emerging domestic market and would potentially attract the 11 per cent rebate on the 17 per cent sales tax the Chinese government currently levies on semiconductor products. Imports do not qualify for the rebate.

That rebate is currently being challenged by the US government, which has filed an official complaint with the World Trade Organisation (WTO).

For Hynix in particular, the plant provides a way around the punitive import tariffs both the European Union and the US have imposed on its memory products. In the US, Hynix has its own memory plant that is not subject to the import duty, but the Chinese JV plant would at the very least provide an alternative market for Hynix products and at best allow the company to bypass the EU's duty.

The South Korean government is also seeking the WTO's redress against the US and EU tariffs. ®

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