Japan Pledges to Curb ‘Gray Market’ in Chips
An official of the Ministry of International Trade and Industry acknowledged Tuesday that Japanese semiconductors are being sold by “gray market” trading firms in other Asian countries at prices below the level that the ministry has set to prevent dumping.
But Osamu Watanabe, MITI’s American division director, told foreign correspondents that Japanese chip makers themselves are not dumping chips and predicted that new action taken by MITI will resolve U.S. complaints about sales of Japanese chips in third-country markets.
The MITI official made the statements in a special news conference he called on instructions from Prime Minister Yasuhiro Nakasone to explain the measures Japan will take to implement a U.S.-Japan semiconductor agreement that was signed on Sept. 2. Nakasone ordered Hajime Tamura, MITI’s minister, and four other ministry officials to do their best to uphold the agreement with the United States, Watanabe said.
Reagan Administration officials have threatened to break off the agreement by the end of the month if MITI fails to make it work. Among other things, the agreement calls for an end to Japanese dumping of 256-kilobit D-RAM (dynamic random access memory) chips in other countries and for U.S. and other foreign producers to gain greater access to Japan’s chip market.
Gray Market Chips Cheaper
The trade accord set aside two dumping cases and an unfair trade practices complaint against Japanese chip makers. If the agreement is suspended, the dumping cases could be reinstated, probably leading to the imposition of duties and possibly other measures.
Yukio Honda, chief of MITI’s industrial electronics section, said “small Japanese trading firms” as well as U.S. and Korean companies have created a so-called gray market for Japanese-made 256-K D-RAM chips in such places as Korea, Taiwan and Southeast Asia.
The U.S., Korean and gray market Japanese firms are selling 256-K D-RAM chips for as little as $1.60 in such markets, he added.
Japanese semiconductor manufacturers themselves and their sales subsidiaries in third-country markets, however, are offering their 256-K D-RAM chips at prices of more than $2, the minimum export price MITI has established to prevent dumping, Honda said.
As a result, he said, the Japanese makers are suffering a decline in their sales of 256-K D-RAM chips. The volume of Japanese monthly sales in the Asian third-country market has plummeted to only 37% of the level that prevailed between last July and September, he added.
A rapid increase in overall Japanese chip exports to the Asian countries in the past eight months, Honda said, stemmed from sales of other types of chips used in audio recorders, TV sets, watches and toys.
Watanabe insisted that American charges that Japan was “violating” or “not upholding” the agreement were unfair.
‘Trickery’ Cited
“The (semiconductor) market has developed in ways which neither we nor the United States could have expected when we signed the semiconductor agreement. We have discovered that whatever you do, businessmen will find a loophole,” he said.
Honda cited small trading companies that buy cheap chips in Japan, where the minimum price provision does not apply, and export them at prices below $2, using “trickery” in submitting false export data to MITI. The firms, he said, appear to be circumventing the $2 minimum through “packaged export deals” in which they understate the real prices of other products and overstate the real price of the memory chips. Honda said MITI “knows who these firms are” but has not been able to produce solid evidence.
MITI, Watanabe said, has ordered a dramatic cutback in production to close the “gray market” loophole.
