6 Japan Chip Makers Cited for Dumping : Commerce Dept. Says Semiconductor Firms Violated Tariff Laws
Six Japanese semiconductor firms “dumped” memory chips in the U.S. market in violation of tariff laws, the Commerce Department ruled Tuesday in a preliminary decision.
The tentative finding of dumping, in a case brought by a small, maverick chip maker called Micron Technology of Boise, Ida., is the first involving semiconductors. As such, it has major implications for the ongoing U.S.-Japan negotiations on trade.
If the finding stands, the government could impose duties on the offending chips and fines against the companies. But trade experts consider monetary sanctions secondary in importance to the leverage it gives to U.S. trade negotiators, who are seeking ways to cut this country’s high-technology trade deficit.
The U.S. semiconductor industry has been battered by plummeting prices for more than a year, a phenomenon that it blames on Japanese pricing tactics as well as a worldwide slump in demand. A trade group claims that the slump has cost 54,000 jobs this year.
A second dumping case covering another type of semiconductor already has been filed, and a trade task force reportedly recommended last week that the Reagan Administration file its own anti-dumping complaint against Japan in a more strategic type of chip.
Part of Debate
A trade consultant to the domestic chip industry, former Commerce Department trade expert William Finan, said the dumping cases have become part of the debate in yet another case--the U.S. industry’s formal demand for better access to Japan’s semiconductor market. Those negotiations are continuing this week in Washington.
Though the trade talks and the dumping cases are legally unrelated, Japan wants “a package deal,” Finan said. He said the Japanese negotiators are “willing to accommodate the concerns about access, but they don’t want the dumping cases to proceed.”
The dumping ruling by the Commerce Department’s International Trade Administration represents a tentative conclusion that the Japanese firms sold certain types of semiconductors here for less than it cost to manufacture them. In an earlier stage of the same case, the separate International Trade Commission found that U.S. semiconductor firms had probably been damaged by imported chips.
The dumping findings to date are preliminary and are to be followed by hearings, with final rulings due around April 1. Though the Commerce Department didn’t announce its findings Tuesday, Micron Technology, defendants and consultants confirmed the dumping ruling.
The case involves a type of semiconductor called a 64K DRAM, (for dynamic random access memory). It can store about 64,000 pieces of information and is the most common type of chip in computer memories.
Prices for the 64K product plummeted to as low as 35 cents apiece from $3.50 within 18 months, with disastrous financial consequences for some U.S. firms.
Rise in Prices
In 1984, about 128 million of the 64K memory chips were imported from Japan. Then, the chips sold for about $460 million.
Prices have recently climbed back up to the 90-cent range, partly because several major U.S. firms pulled out of the suddenly unprofitable market altogether, easing overcapacity.
On Monday, NEC Corp. of Japan declared a 20% price increase on the 64K chip and its more powerful sister product, the 256K, attributing the move to the strengthened yen against the dollar.
The new-generation 256K chip is expected to be the target of a White House-initiated dumping complaint. The Japanese industry already dominates the markets for both sizes of DRAMs, but the 256K chip is now replacing the 64K chip in the marketplace and thus represents larger stakes in a dumping case.
“I think it’s very encouraging and very positive. But it does not cure the damage that’s been done,” said Joseph Parkinson, president of Micron, which has laid off half of its 1,400 workers because of the industry’s decline. Micron managed only to break even in its latest fiscal year after 1984 profits of $28.9 million, and it is currently losing money, Parkinson said.
The firms named in Micron’s complaint are Japan’s biggest producers of semiconductors: NEC, Hitachi, Fujitsu, Toshiba, Mitsubishi and Oki. Because the Commerce Department didn’t formally announce its ruling, there was no immediate comment from the defendants. But an attorney for one defendant noted that the finding was a preliminary one “based on a shuffling of paper without any hearings.”
According to Micron, the government found dumping “margins” of 8.9% at NEC, 18.5% at Hitachi, 12.5% at Oki, 94% at Mitsubishi and an average of 38.8% for “others,” apparently meaning Fujitsu and Toshiba.
The percentages refer to the amount below manufacturing costs that each company’s products were priced. In cases where tariffs are imposed, they are based on those margins.
Out of Business
Since Micron filed its dumping complaint in July, such firms as Motorola, Intel, National Semiconductor and Advanced Micro Devices have quit making 64K DRAMS altogether, and another major producer, Mostek, has gone out of business.
“It confirms what we’ve been saying right along--that there has been dumping,” said Thomas Hinkelman, president of the Semiconductor Industry Assn. in Cupertino, Calif.
“This case is pretty indicative of dumping as a practical remedy. As a remedy to prevent serious injury in a fast-moving business, it has not worked. But it may send a signal that the U.S. government will require that our trade laws be obeyed.”