Commerce Secretary Malcolm Baldrige yesterday announced that, for the first time, the Commerce Department itself would initiate an investigation to determine whether Japan's semiconductor industry has been "dumping" 256K computer memory chips in the United States.
The case could lead to a precedent-setting penalty, as well. If Commerce concludes that chips have been sold below production cost -- or dumped -- it plans to levy a surcharge on future generations of Japanese-developed memory chips.
Saying the U.S. semiconductor industry "faces serious damage" and that private sources have estimated that industry losses in the hotly contested 256K-chip market could total nearly $1 billion, Baldrige cited figures showing that the price of the chips had dropped from $18 to $20 a unit in 1984 to below $2.
"The analysis of Japanese semiconductor industry's pricing practices is sufficient to begin the investigation," he said.
Memory chips are a key element of computer and telecommunications systems and Japan has grown to dominate that market since the late 1970s, drawing repeated charges from U.S. semiconductor companies that Japanese companies were selling below cost to capture market share. A 256K chip, the current industrial standard, is able to store more than 256,000 pieces of information.
Several other trade actions against Japanese semiconductor companies for dumping memory chips are pending, including a complaint under Section 301 of the Trade Act filed by the Semiconductor Industry Association and International Trade Commission complaint filed by Micron Technologies of Idaho. Until now, the Commerce Department investigations have only been launched after industry complaints.
If Commerce determines dumping took place, the penalties could be applied to the planned one-megabit chip, capable of storing more than 1 million pieces of information.
For example, if Commerce determines there is a 20 percent "dumping margin" on 256K chips by Japanese companies, those companies would have to pay a 20 percent penalty on the next-generation megabit chips. Japanese companies are expected to be leaders in this next generation of memory-chip technology.
This approach marks the first time that Commerce has sought to anticipate technological change in its antidumping efforts.
"The Semiconductor Industry Association certainly welcomes vigorous action in the case of Japanese dumping of 256K random-access memory chips," said SIA Washington counsel Alan Wolff. "The fact that this case would have consequences for later generations of memory chips shows that the government is now focusing on preventative steps rather than just to remedy injuries. That's extremely significant."
"It is very regrettable that the Commerce Department plans to do this," said Taizo Yokoyama, the commercial minister at the Japanese Embassy. "On semiconductors, we have been consulting under Section 301 of the Trade Act and the consultation includes the pricing issue. We have been proposing a floor price for Japanese semiconductors."
Japanese officials said they had not yet determined whether or not to cooperate with the Commerce Department investigation.