The Commerce Department found yesterday that Japanese companies are dumping a major semiconductor product in the United States at prices far below the cost of its production.
The preliminary finding, which was hailed by domestic semiconductor makers, is the latest in a series of setbacks suffered by the Japanese industry in three unfair-trade-practice complaints brought by U.S. companies and the Reagan administration that could lead to import restrictions against Japan.
Another Commerce Department preliminary ruling, in an investigation ordered by President Reagan's trade strike force, is expected later this week, and negotiations are continuing between U.S. and Japanese trade officials over an industry complaint that Japan systematically blocked sales by American semiconductor makers in its market.
These talks, which were held in Tokyo last week and will continue here soon, could lead to an overall settlement of all the semiconductor trade complaints brought against Japan by industry and government, U.S. Trade Representative Clayton Yeutter was reported as telling a bipartisan group of congressmen last week. Congressional sources said Japan is pressing for an overall settlement within the next month before a U.S. visit by Prime Minister Yasuhiro Nakasone.
Semiconductors, also known as chips, are a key element of computers and telecommunications systems and now have spread into almost all manufactured products, from cars to washing machines. The United States once was the world leader, but Japan began to dominate segments of the market in the late 1970s, and now the two countries are locked in a major battle over development of future generations of semiconductors.
Yesterday's Commerce Department ruling dealt with a complaint filed Sept. 30 by the three largest Silicon Valley semiconductor manufacturers: Advanced Micro Devices Inc., Intel Corp. and National Semiconductor Corp.
They charged eight Japanese makers of EPROMs (erasable programmable read-only memories), a semiconductor memory device used to store programs, of selling chips in the United States at less than their fair market value. This is known as dumping, and is illegal under U.S. trade laws.
"I hope the Japanese see this as one more reason to reach a comprehensive settlement of all semiconductor issues. Otherwise Congress will take it as one more reason to pursue sectoral retaliation," said Sen. Pete Wilson (R-Calif.).
Intel general counsel Tom Dunlap said the Commerce action shows that "predatory pricing to gain market share is a well-established strategy of certain Japanese companies." He added that Japanese firms "have been found guilty of dumping" in 30 cases since 1970.
The Commerce Department's preliminary findings showed that the greatest offender was NEC Corp., which sold EPROMs at prices the department described as 188 percent under the fair market value. NEC refused to supply data for the investigation, forcing Commerce Department analysts to use the best information available in figuring the fair market price.
As a result of the finding, the U.S. Customs Service now will demand a cash bond from Japanese EPROM suppliers equal to the dumping margin.
The Commerce Department is expected to make a final dumping determination by May 27. The International Trade Commission then has 45 days to decide if U.S. makers have been injured by the Japanese dumping.
In other cases, the ITC decided Monday to investigate charges that eight Japanese companies and one South Korean firm are violating semiconductor patents held by Texas Instruments Inc. The Dallas company also filed a patent-infringement lawsuit in federal court against the Japanese and Korean companies.
Besides the EPROM dumping case, the industrywide complaint and the investigation initiated by the Reagan strike force, another American company, Micron Technology, charged Japanese companies with dumping 64K random-access-memory chips in the United States. The Commerce Department and ITC have issued preliminary findings supporting that complaint.
The ITC also found the industry suffered injury as a result of dumping in the case brought by the Reagan strike force.