Vendors strike back at dumping charge

Processors Siemens blames subsidised funds in pricing war.

The Korean Semiconductor Industry Association (KSIA) has hit back at allegations made by Siemens' chief executive that suicidal pricing was responsible for the closure of the German company's Tyneside factory.

Hye-Bum Choi, director of the KSIA, said Korean semiconductor producers rejected 'as totally ridiculous' the allegation that they had been dumping memory chips.

On 2 August, Heinrich von Pierer, chief executive of Siemens, named suicidal pricing by Korean manufacturers and the investments some vendors receive from the International Monetary Fund as part of the reason for the company's decision to close the plant.

The German electronics group recently also warned of more possible plant closures after stating it expects to make losses next year, adding to the DM1 billion it anticipates losing this year (PC Dealer, 26 August).

Hye-Bum stated Siemens could not ignore 'an unequivocal and specific promise' made by the Korean government that IMF funds will be used to repay foreign debts and increase currency reserves - not to subsidise prices.

Furthermore, he said, Siemens was unfairly blaming the Korean big three for a general downcycle. 'There is no reason to single out Korean producers for a worldwide phenomenon which concerns all producers,' Hye-Bum said.

'The Korean producers have taken drastic steps to reduce the over-capacity in the memory market by suspending investment plans.'

On 31 July, when Siemens announced the closure, Peter Mandelson, recently appointed head of the DTI, contributed to the row by blaming Korean over-production.

But Mandelson's views conflicted with a promise made by Derek Fatchett, from the Commonwealth & Foreign Office, of more investment for Korea.

However, industry sources said the European Union is continuing to take the allegations of dumping seriously. According to the sources, the EU will launch an investigation in September.