Chipmaker’s struggles appear unending

Hynix Semiconductor Inc., the struggling, third-largest memory chipmaker in the world, will be hit hard by the preliminary decision of the U.S. Commerce Department to impose 57 percent countervailing tariffs on the company’s U.S. exports, indusry experts said. Hynix now has to put deposits for its goods cleared at customs the minute that the decision of the U.S. government is officially announced. Industry analysts estimate the deposits will amount to 29 billion won ($23 million) a month. The United States accounts for 26 percent of Hynix exports. Of that 26 percent, Hynix must put up deposits for 12 percent. Hynix produces the remaining 14 percent in its local factories in the United States. If the European Union on April 25 rules in favor of the complaint from Germany’s Infineon Technologies AG and levies about 35 percent in countervailing duties, Hynix may have to put up an additional 9 billion won in deposits a month. The ruling also put Hynix at a disadvantage in the deals with its buyers in the United States and Europe, most of which are large long-term buyers. Buyers may switch suppliers concerned with supply disruptions, thus Hynix keeps sending messages to large buyers that they will supply products with reliance even after the preliminary ruling. Industry experts predicted that if countervailing tariffs at the final ruling remain in two digits, Hynix may lose competitiveness in the long term and the bailout measures by creditors may be of no help in the end. At signs that the United States and the European Union are likely to rule in favor of the petitions made by their local companies, Hynix’s U.S. rival Micron Technology Inc. and the German competitor Infenion, Hynix since November has gradually cut its exports to the regions. The United States, which accounted for 32 percent of exports by Hynix in June 2002, has dropped its share to about 26 percent. What Hynix counts on is its factories in Eugene, Oregon, in which the company will invest $100 billion starting this month to upgrade facilities and increase production. The factory currently produces 32,000 256 megabit dynamic random access memory chips a month. by Choi Ji-young