Japan Freezes Big Shipments of Chips to U.S. : Believes Surge Is Due to New Price Accord

Japan has blocked unusually heavy U.S. orders for semiconductors to ensure the success of a new microchip trade pact between the two countries, according to Ministry of International Trade and Industry (MITI) officials.

MITI moved at the end of July to halt massive shipments of the tiny electronic circuits to U.S. customers who wanted orders filled before the accord on price monitoring took effect Aug. 1, a ministry official said. MITI reported that it is temporarily withholding export certificates for 256K DRAM (dynamic random access memory) chips, which make up a substantial share of Japan’s semiconductor exports to the United States.

“The new agreement is hard on the users, so they wanted to buy at the cheaper prices,” a MITI official said. “It’s not strange from a business perspective, but it could cause major confusion that we don’t want.

“It wouldn’t be good for the future of the semiconductor trade. We’re just trying to give the agreement a soft landing.”

Wants to Investigate

MITI said the freeze on export certificates for the 256K DRAM chips would last until next week so that it can investigate how much of the surge in orders was due to genuine user demand and how much was for stockpiling at low prices.

Orders found to be at a reasonable level would get approval for export at the lower contract prices, the ministry said.

The new accord, hailed by both governments as a major step for free trade, requires Japanese makers to provide information on production costs to ensure that certain types of chips sold in the United States are fairly priced.

In return, Washington agreed to drop anti-dumping suits against seven Japanese manufacturers that account for 90% of Japan’s semiconductor exports to the United States.