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  • Korean DRAM Makers Vow to Remain Major Players
  • March 23, 1998 (SEOUL) -- The finances of Korea's IC companies are under pressure from the country's economic crisis, with easy credits from lenders no longer available and costs of imported equipment soaring due to the weak Korean won, but those companies vow to remain major players.
    Rivals in Japan and Taiwan are taking advantage of the situation to increase their market shares, Korean industry analysts said.

    To make matters worse, the United States is stepping up trade pressure on the Korean chip makers, which are trying to export their way out of the crisis. Early in March, the U.S. Commerce Department imposed preliminary anti-dumping margins of 7.61 percent and 12.64 percent on dynamic random access memory (DRAM) devices produced by LG Semicon Co., Ltd. and Hyundai Electronics Industries Co., Ltd., respectively.

    A senior official at Hyundai Electronics called the U.S. action "outrageous."

    "We will fight until this misunderstanding on the part of the U.S. is cleared up."

    Kim Jae-byung, a trade affairs specialist at LG Semicon said the company would also dispute the anti-dumping charges against it. "We will prevail when we get a chance to make our case," he said.

    Samsung Electronics Co., Ltd. the world's largest DRAM manufacturer, was not cited in the U.S. action.

    The ruling was based on the evaluation of Korean DRAM sales in the U.S. between May 1996 and April 1997. If the final ruling, expected in July, upholds the preliminary charges, Korean exports of memory chips to the U.S. will be hurt.

    The Ministry of Trade, Industry and Energy, said that Korean semiconductor exports increased 11.6 percent in the first seven weeks of this year, from a year earlier, compared to a 2.3 percent drop in 1997.

    The Korean complaint against the U.S. anti-dumping accusations was already presented to the World Trade Organization, which has set up a panel to look into the dispute.

    Micron Technology Inc. is the most vocal critic of the Korean semiconductor industry. Micron blames the international bailout of the Korean economy for sustaining Samsung, LG and Hyundai and said that such moves harm DRAM makers in the world market.

    In February, Micron chairman Steve Appleton testified at House Banking Committee hearings in Washington, blasting the Korean firms for triggering a worldwide glut and price collapse and contributing to the country's financial crisis.

    Korean IC companies have been forced to slash their investment as their cash reserves dried up. The Korean government is still backing the industry as a strategic source of economic growth.

    In a recent report, the Korea Semiconductor Industry Association urged a total investment of 2.36 trillion won in the local semiconductor industry through 2010 to boost non-memory production to 50 percent of total industry output. That would translates into a 15 percent share of the world market for non-memory devices.

    The association issued a statement in February denouncing the attack from Micron Technology.

    "The allegation made by Micron about Koreans dumping their chips is groundless," the group said.

    It insisted that the international bailout funds for Korea won't be used to finance the chip makers.

    (James Lim, Asia BizTech Correspondent)

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    Updated: Sun Mar 22 16:03:22 1998