Hear EC staff to ask duties on South Korean DRAMs

Electronic News, August 31, 1992 by J. Robert Lineback

BRUSSELS--A European Commission (EC) staff proposal for provisional antidumping duties against South Korean DRAM suppliers reportedly will be submitted to the EC in the coming weeks following 18 months of investigations and hearings. If the EC Commission approves the proposal, antidumping duties could be applied to Korean DRAMs as early as October, according to industry sources close to EC investigators.

EC officials, however, were unavailable for comment, but European system makers, nevertheless, anticipate approval and are bracing for a jump in the price of DRAMs, particularly 1-megabit parts and older 256-Kbit chips, which are dominated by Samsung Electronics.

"Even if the provisional antidumping duties are replaced by a minimum pricing system, as was the case earlier with Japanese suppliers, the cost of DRAMs will certainly go up in Europe and be higher than the rest of the world," said Luigi Tolino, worldwide component purchasing manager for Ing. C. Olivetti & Co., Ivrea, Italy. He added that he expected most European system houses to refrain from increasing DRAM purchases ahead of antidumping actions. "We are all trying to maintain our just-in-time purchasing systems," he noted.

Once it passes a final review, such a proposal is likely to be published in the EC's journal in the next four weeks, said Eckhard Runge, director general of the European Electronic Component Manufacturers Association (EECA), which filed the original dumping complaint against the Korean suppliers last year. Investigators and committees completed their work just before August, proposing provisional duties on DRAMs sold by Samsung, Goldstar and Hyundai. The proposal is now being translated into the different European languages for review by the full Commission.

Under such a proposal, duties can be lifted once a price undertaking system has been established, with the help of Korean suppliers. Mr. Runge said the EECA supports the eventual use of a pricing system, based on manufacturing costs plus a percentage of profit, because it is less likely to hurt European IC users compared to duties.

At this time, EC officials are not saying how high antidumping duties might be set, according to Mr. Runge. "I think the EC hopes to have the price undertaking in place, with the cooperation of the Korean suppliers, by the end of the year," he said, adding "No measure should be taken which excludes competitors from the market. That means something has to be done for the high-cost manufacturers because the Koreans are not all equal in terms of production costs."

Specifically, European officials do not want to impose penalties that place a greater burden on Goldstar and Hyundai than on the leading Korean DRAM supplier, Samsung. "The EC is interested in having a large number of competitors in the markets," said Mr. Runge.