Elpida Memory Inc filed a request with the Ministry of Finance on June 16 to impose a countervailing duty on memory chips exported to Japan by Hynix Semiconductor Inc of Korea, sources close to the matter said.

Elpida claims that loans extended to Hynix from Korean banks into which the Korean government has pumped capital constitute government subsidies, helping Hynix export chips to Japan at unfairly low prices.

The MOF is expected to investigate the matter in cooperation with the Ministry of Economy, Trade and Industry, a move likely to lead to Japan's first-ever imposition of a countervailing duty.

A countervailing duty can be levied on imported goods when the government believes they are being sold in the domestic market at unfairly low prices because of subsidies provided by the government of the exporting country. There must also be a finding that sales of the products are hurting domestic firms.

Japan has never imposed this kind of duty before, though it has levied antidumping duties on three types of imported products, including chemicals and textiles.

Hynix had a 14.7% share of the global DRAM (dynamic random-access memory) market in 2003, ranking fourth in the world, according to a survey by iSuppli of the US. In Japan, the Korean firm had a 20% share that year, trailing only Samsung Electronics. In comparison, Elpida ranked sixth in the global market with a 4.3% share and third in Japan with a 15% share.

Elpida is trying to catch up with Hynix and other rivals by building the world's largest DRAM plant in Hiroshima Prefecture, among other steps.

The US Department of Commerce decided in July 2003, at the request of Micron Technology Inc, to impose a countervailing duty of up to 44.71% on Hynix-made DRAMs imported into the US. In August 2003, the European Union decided to levy a similar duty of up to 34.8% on Hynix's memory products.

In an attempt to overturn these rulings, the Korean government recently filed an appeal with the World Trade Organization.

By: DocMemory
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