More Japan Firms Accused : U.S. Contends 5 Companies Dumped Chips

From Times Wire Services

In its second major action against Japanese computer chip makers in three days, the Commerce Department on Thursday accused five firms of illegally dumping sophisticated memory chips in U.S. markets.

The ruling applies to the 256-kilobit dynamic random access memory (256K DRAM) chip. It is a major component in home computers, telecommunications devices and other consumer electronic products.

The department said that NEC Corp., Hitachi Ltd., Toshiba Corp., Fujitsu Ltd. and Mitsubishi Electric Corp. violated U.S. trade laws in selling the chips below their cost of production.

The ruling automatically triggers stiff tariffs on Japanese 256K DRAM chips.


The tariffs, based on “dumping margins,” vary according to the amount by which the manufacturers were found to have underpriced their chips. The five companies were assigned dumping margins ranging from 19% for Hitachi to 108% for NEC.

The margins represent the difference between the actual price charged by each firm and the fair value price, which is based on each company’s production costs plus an 8% profit margin.

On Tuesday, the agency had announced a similar finding on a complaint brought by U.S. semiconductor manufacturers on another type of computer chip. Four of the same firms--NEC, Fujitsu, Hitachi and Toshiba--were cited in that earlier case.

The 256K DRAM complaint, filed Dec. 6, 1985, is unique in that the U.S. government initiated the case rather than waiting for individual companies to file.

In announcing the preliminary ruling, Commerce Secretary Malcolm Baldrige cited U.S. industry estimates of a loss of $900 million in sales because of unfair Japanese pricing practices in the $22-billion worldwide semiconductor market.

The department’s anti-dumping action was its third in three months against Japanese chip makers and reflects the Administration’s increasingly tough stance against Japan’s trade practices.

U.S. semiconductor manufacturers have charged that Japanese firms deliberately cut prices on the devices to drive out U.S. competition. Japanese firms have captured close to 90% of the market for this sophisticated type of computer component in recent years, according to industry reports.

Andrew A. Procassini, president of the Semiconductor Industry Assn., a San Jose-based industry group, said the two actions “represent one part of a clear message our government is sending to the Japanese--that we will longer tolerate the dumping of Japanese semiconductor products in the U.S. market.”

He said the U.S. government’s second message is that it will no longer tolerate “Japan’s unwillingness to open its market to U.S.-made semiconductors.”

Baldrige noted that “at least six U.S. plants and production lines have been shut down in the past year within the semiconductor industry, and overall employment in the industry has dropped 20%.”

The ruling comes on the first action recommended by a “strike force” set up by President Reagan last September, when he announced a new trade policy designed to ease the growing U.S. international trade deficit.

The Commerce Department said it would make a final ruling on the latest computer chip case May 27, the same date that a decision is expected on the preliminary ruling made three days ago. The preliminary decisions could be reversed, but that is not believed to be likely.

On Capitol Hill, Sen. Lloyd Bentsen (D-Tex.) said: “I applaud the action by Secretary Baldrige. It is time we called a screeching halt to the predatory pricing practices of Japanese chip makers and put others on notice that we’ve had it up to here with dumping.”

Bentsen said that “workers in the American semiconductor industry have been victims of unfair competition in their own backyard. And, as these penalties are imposed in the months ahead, it will go a long way toward making the competition more even.”