Korean dumping affirmed: in Europe

Electronic News, June 15, 1992 by J. Robert Lineback, Elizabeth de Bony

BRUSSELS--Just one week after the International Trade Commission ruled Korean DRAM prices may be hurting the U.S. semiconductor industry, the European Community Anti-dumping Committee has come to a similar conclusion in this market, moving one step closer to expected dumping penalties.

The committee's national trade experts here concluded Korean suppliers--Samsung, Hyundai and Goldstar--had been dumping products in the EC market and causing harm to the European semiconductor industry in terms of lost profits and market share. The committee agreed with preliminary findings of the Ec Commission, which has been expected to make a final decision by the end of June. Also listed as a dumper in the EC Commission findings is Intel, which has been reselling Samsung-manufactured DRAMs in Europe.

The committee did not disclose any decision on how to deal with the alleged dumping, and final action against the Korean suppliers could be delayed through the summer as the EC Commission attempts to decide what kind of penalties to impose.

EC regulations allow for either punitive duties or the creation of a reference price system, which would set minimum selling prices for the Korean suppliers. The pricing system has been recommended by the European Electronic Component Manufacturers Association, which originally filed the dumping complaint against the Korean suppliers last year.

"We prefer a price undertaking because we believe it will be less harmful to the European chip customers," said Klaus Brinkmann, chairman of the EECMA's semiconductor working group. "At the same time, we know a duty system would cost the dumpers more money. But we have recommended not to impose anti-dumping duties."

Both dumping duties and the price reference system ostensibly eliminate dumping of imported products by bringing the cost up to the level of domestic products. The main difference between the two is that duties would put money into the EC budget while a reference system can keep prices higher, resulting in increased profits for suppliers.

An EC Commission official who asked not to be identified said the failure to decide on corrective action reflects, in part, the need to take into consideration numerous factors. A number of European system makers have complained that they would become less competitive in global markets if their DRAM costs were raised by anti-dumping measures.

EC Commission sources said last week that a decision on what action to take could be announced in the coming weeks, but one private trade lawyer suggested a decision might be delayed until September.

Presently, sources indicate "The EC was leaning towards the introduction of price undertakings" as it did earlier in anti-dumping actions against Japanese suppliers of DRAMs and EpROMs.

The EC development follows a U.S. investigation of Korean DRAM dumping based on a Micron Technology complaint. The U.S. International Trade Commission ruled earlier this month that Korean DRAM pricing had caused harm to the U.S. semiconductor industry (EN, June 8). Consequently, the complaint is now being passed on to the Department of Commerce, which will issue the final decision as to whether dumping took place in the U.S. A preliminary determination is due about the end of August.

A final ruling by the EC against the DRAM suppliers would not change the status quo among Korean suppliers, according to Byron Harding of Dataquest Ltd., London.

"Today, Samsung Electronics has a large share of the European DRAM market. Goldstar and Hyundai are still minor players, although they are capable of making a move up. A reference price system could end up keeping Samsung as the established Korean leader because it has already driven its costs down," Mr. Harding said.

Dataquest estimates that Samsung's shipments represent about 90 percent of the Korean DRAMs sold in Europe. This year, Samsung will ship 25 percent of the 1-Mbit DRAMs used in Europe, which will have a total value of $500 million, according to Dataquest. In the maturing 256K segment, Samsung is expected to ship 90 percent of the DRAMs used in Europe. Dataquest places the total European 256K market at $70 million in 1992. In the growing 4-Mbit segment, Samsung is expected to claim 15 percent of an $800 million market in Europe this year.