The Department of Commerce decision, which levied a countervailing duty of 57.37% on Hynix DRAM, has effectively blocked shipments of the products into the United States. That has sent Hynix scrambling to supply its U.S. accounts even as its competitors try to use the opportunity to win new business.

The preliminary ruling was issued after the Department of Commerce decided that Hynix received illegal government subsidies over an 18-month period, from January 2001 through June 2002, enabling the company to remain financially solvent.

In its decision, the agency stated that "Hynix was uncreditworthy and the government of Korea directed credit" to Hynix using government-owned or -controlled banks.

The decision followed a complaint brought last November by DRAM supplier Micron Technology Inc., Boise, Idaho, alleging that Hynix received a total of $11.7 billion in illegal government-sanctioned subsidies as part of three bailouts. Samsung Electronics Co. Ltd., also part of the case, was assessed a 0.16% duty, which is considered the minimum and will be waived.

For Hynix, however, the DRAM duty is expected to open a new flank for it to defend as its rivals try to use the ruling to their advantage.

"This is going to cause short-term turbulence in the market," noted Soo-Kyoum Kim, an analyst at IDC in Seoul.

Farhad Tabrizi, vice president of global memory marketing for Hynix Semiconductor Inc. in San Jose, said the company will continue to ship 256-Mbit SDRAM and DDR chips from its fab in Eugene, Ore., which isn't subject to the duty. Tabrizi said the fab is running at full capacity of 32,000 wafer starts a month.

The company did not indicate what percentage of its total U.S. sales could be served by the Eugene plant. However, IDC's Kim said the plant has insufficient capacity to fulfill U.S. demand, which could cause customers to turn to other chipmakers to make up a shortfall.

Tabrizi said that, prior to the ruling, Hynix brought enough buffer inventory of 64- and 128Mbit DRAMs into the United States to meet its custom-ers' forecasts.

"We will also drop-ship semiconductors made in Korea to U.S. customer plants in the Asia-Pacific region and other parts of the world outside this country, which aren't affected by the Department of Commerce decision," Tabrizi said.

In all, Hynix expects it can shield about 80% of its DRAM exports to U.S. customers from the duty through the use of drop shipments.

By: DocMemory
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