3 Chip Makers File Trade Petition : Charge Japanese Firms With Dumping Memory Devices
Silicon Valley’s three biggest chip makers, citing a “blood bath” caused by plummeting prices for computer memory devices known as EPROMs, on Monday filed an anti-dumping petition charging Japanese manufacturers with selling the devices below fair value.
The petition, filed with the U.S. Department of Commerce’s International Trade Administration, seeks an investigation by the Commerce unit and the imposition of an anti-dumping duty on Japanese-made chips exported to the U.S.
The petition was filed by Intel Corp., National Semiconductor Corp. and Advanced Micro Devices Inc., who together accounted for 70% of U.S. production of the memory devices in 1984.
The unusual joint petition reflected the U.S. semiconductor industry’s mounting concern over Japanese inroads into the U.S. market for EPROMs and other integrated circuits. Although the U.S. makers maintain their lead in sales of the most advanced EPROMs, industry spokesmen cited Japanese dominance of markets for other semiconductor products, including earlier, simpler versions of EPROMs, as the reason for their concern.
EPROM is an acronym for erasable programmable read-only memory. The worldwide market for such devices, on which programming instructions for computers and peripheral devices such as printers and disk drives can be embedded, totals $1.1 billion annually.
According to the petition, the EPROM market is critical to the U.S. semiconductor industry “because of its enormous potential for growth and because its technology is central to continued U.S. strength in semiconductors and computers.”
Prices Plunge
Prices for the memory devices have plunged this year as a result of overcapacity in the worldwide semiconductor industry and swollen inventories caused by the sluggish market for personal computers and other data-processing hardware.
The price for the popular 256K EPROM--a chip with about 256,000 bits of memory--for example, fell to between $4 and $5 each in August from $17 apiece in January. The petition charged that much of the decline resulted from a relentless attempt by Japanese manufacturers “to eliminate all U.S. competition.”
Japanese manufacturers said they hadn’t had a chance to study the complaint but denied that they have engaged in predatory pricing or dumping.
“The semiconductor industry is in a recession whose impact is being felt in both Japan and the U.S.,” said Mike Tsukamoto, director of the Japan Electronics Bureau. He said Japanese shipments to the U.S. of integrated circuits, which include EPROMs, peaked last October and have been falling ever since.
“It’s a very competitive market,” he added, noting that the strong U.S. dollar has given Japanese producers an advantage.
But F. Thomas Dunlap Jr., Intel’s general counsel, charged that the Japanese were illegally dumping EPROMs into the U.S. market. Dumping is defined as the sale of an imported product below its fair value or below its price in the country in which it is manufactured.
Dunlap once again cited the so-called 10% rule enunciated by Hitachi Ltd. in a flyer that encouraged its distributors to undercut U.S. company products by 10%. Although Hitachi has disavowed that policy, U.S. companies contend that the practice is still followed.
And while U.S. makers still control 80% of the market for state-of-the-art 256K EPROMs and 100% of the market for 512K devices, the U.S. makers now have less than 40% of the markets for the less sophisticated 128K and 64K EPROMs--markets they also once dominated.
“This is the time to deal with this problem, not years from now when they’re ahead of us,” Dunlap said.
Despite relentlessly lower prices, the petition charged, “U.S. companies have refused to cede the market to the Japanese. The result was a veritable blood bath as Japanese drove prices down in every generation of product.”
Howard Bogert, director of Dataquest Inc.’s semiconductor research group, said the petition reflected “the desperation of the U.S. manufacturer’s position.”
As an illustration of the price erosion in the EPROM market, Bogert said: “Imagine that a car which sold for $10,000 a year ago is selling for $2,500 now. That really knocks a business for a loop.”
This isn’t the first time that semiconductor makers have sought relief from Washington. In June, the Semiconductor Industry Assn. petitioned the government to help U.S. companies sell their products in Japan’s protected marketplace.
More recently, Micron Technology of Boise, Idaho, filed an anti-dumping petition against Japanese makers of DRAMs, or dynamic random access memories. The Japanese now dominate the market for such devices.
