Hynix hit by EC import duties

Memory giant's future becomes even more uncertain

The future for troubled memory giant Hynix has become even more uncertain, following news that the European Commission (EC) has joined the US Commerce Department in imposing hefty import duties on the company's goods.

The EC has imposed import duties of 33 per cent against the South Korean firm, after alleging that it had been receiving illegal state subsidies that helped the company sell its memory at lower prices than rivals.

The decision follows a 10-month investigation, in which numerous bail-out loans to Hynix from Korean state-controlled banks were classed as government subsidies.

The ruling comes a month after the US Commerce Department decided to impose even harsher duties of 57 per cent.

Hynix has continued to deny any wrongdoing and claimed that it will be found not guilty when the final EC ruling is made at the end of August.

The EC duties decision upholds the original complaint against Hynix by memory rival Infineon Technologies, although this is only a preliminary ruling.

Subsequent complaints from US firm Micron led to the recent import duties levied by the US Commerce Department. Micron claimed the subsidies to Hynix amounted to $16bn in just two years.

"We used to deal with Hynix, but the unpredictability factor became too much," said Dave Flack, sales and marketing director at distributor Memory Plus.

"This kind of thing happens to most big memory companies at some time, but Hynix is in turmoil. The other reason we steer clear is because there was a lot of re-badged Hynix goods in the channel for while, although this was probably through no fault of its own. It has just been targeted by unscrupulous suppliers."

However, it remains to be seen whether Hynix sales in the UK will be seriously damaged by the duties.

"There are still a lot of Hynix products in the market because there are not that many manufacturers left. Also, for some buyers it might be easier to stick with Hynix than to redesign a new product around memory from a different supplier," said Flack.