Japan Says Dumping of Chips Has Stopped : Practice Halted in Southeast Asian Markets, U.S. Officials Are Told
Japanese trade officials assured U.S. Department of Commerce representatives on Tuesday that Japan’s semiconductor makers have stopped dumping computer memory chips in Southeast Asian markets, thus complying with one of the most critical elements of a shaky trade accord, sources said.
Officials from Japan’s Ministry of International Trade and Industry and the Commerce Department are conducting in Washington a series of closed-door talks described by U.S. officials as “regularly scheduled consultations” provided for by the semiconductor trade agreement. The talks have been held primarily to resolve the U.S. semiconductor industry’s contentions that Japanese manufacturers are continuing to dump, or sell at below fair market value, computer chips in countries other than the United States and Japan.
Commerce officials have threatened retaliatory steps against the Japanese, possibly including bans on imports of consumer products such as videocassette recorders and televisions, unless there are significant signs by year-end that manufacturers are complying with the trade agreement. The assurances that Japanese companies are raising prices apparently are intended to protect Japanese chip makers--consumer electronics giants such as Hitachi, Mitsubishi, Fujitsu, Toshiba and NEC.
Clouds on the Horizon
Even though the Japanese companies now are reported to be complying with provisions of the agreement, there are signs of dissension. The Japanese Electronics Industry Assn. has asked MITI to renegotiate the agreement, and some companies have urged that it be scrapped entirely, according to industry sources.
The U.S. semiconductor industry, vociferous in its complaints about perceived violations of the agreement, has repeatedly stated that it wants to keep the pact.
The accord, reached July 31 and signed in September, calls for Japanese companies to end dumping in all world markets. Although Commerce has set fair market values on Japanese chips exported to the United States, semiconductor makers and users in this country contend that prices have remained at below-cost levels in such places as Malaysia, Hong Kong, Singapore and Taiwan.
The price differences, U.S. chip buyers say, threaten their competitiveness and may force them to move more manufacturing overseas. The U.S. semiconductor industry on Nov. 18 urged Commerce to impose sanctions against the Japanese chip makers that fail to comply with the trade pact.
About two days later, MITI officials gave “administrative guidance” to Japanese chip makers, instructing them to keep prices of chips sold in third-country markets--nations other than the United States and Japan--at “reasonable levels” to avoid imposition of U.S. dumping penalties. MITI cannot order Japanese companies to raise prices, but it did threaten to suspend foreign trade licenses if there was no improvement in third-country pricing, according to reports in the Japan press.
In the Washington talks this week, MITI officials confirmed that the Japanese press reports were accurate, a source close to the talks said.
Although it is difficult to get uniform pricing information from the third-country markets, some U.S. semiconductor industry sources said Tuesday that they have seen indications that Japanese chip makers are increasing prices in those markets.
According to data collected Nov. 20 by Dataquest, a market research firm in San Jose, prices of Japanese-made chips sold in Taiwan have begun to increase. It found that prices of a 256K D-RAM, a standard memory-storage device used in computers and covered by the trade pact, ranged from $1.88 to $2.50, up from $1.70 to $2.50 two weeks earlier.
“This is the first time we’ve seen anything on prices going up, outside the United States and Europe,” said Mark Giudici, an analyst with Dataquest.
Other companies, however, say they have yet to see any price increases in third-country markets, and that there is such a glut of computer memory chips on the market that it will be months--not weeks, as Commerce expects--before the prices actually paid by customers increase.
In Japan, prices of D-RAMs have been even lower, ranging from $1.75 to $1.94 for the same product, according to published reports. Although U.S. companies are concerned about those prices, there is no provision in the trade agreement covering that market.
Industry analysts say that Japanese companies are swimming in inventory, primarily because of the sluggish U.S. market.
In the United States, while fair market values for Japanese-made 256K D-RAMs range from $2.50 to $4, the average price being paid by U.S. customers is $1.90.
That, said Giudici, is true regardless of where the chips are manufactured.
In the meantime, Commerce is readying new fair market values that will take effect in January, lowering further the prices the Japanese can charge, and, analysts say, the street price U.S. customers will pay.
