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Japan to Scrap Tariff on South Korea's Hynix

Japan has decided to remove a special tariff on computer memory chips made by South Korea's Hynix Semiconductor, Japan's Kyodo news agency reported on Monday.

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The Ministry of Economy, Trade and Industry is scheduled to announce at 1:00 p.m. whether it will lower its 9.1 percent countervailing duty on dynamic random access memory (DRAM) chips made by Hynix, the world's No. 2 memory chip maker which competes with Japan's Elpida Memory.

The memory sector is struggling to deal with mounting losses and debt after two years of steep price falls due to weak demand.

Japan lowered its tariff on chips from Hynix from 27.2 percent in September, after a World Trade Organisation ruling in 2007 that Tokyo cut its duties on Hynix's dynamic random access memory chips.

It has put its remaining tariffs on Hynix under review.

Elpida competes with Hynix as well as No.1 memory chip maker Samsung Electronics in DRAM.
The two South Korean firms also compete with Toshiba in NAND flash memory chips.

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Japan slapped duties on Hynix chips, saying the chip maker received state-led bailouts in 2001 and 2002 that hindered fair competition.

It has dropped the tariffs in place to counter the 2001 bailout, but has kept duties to account for bank loans the chip maker received in 2002.

Indebted Hynix's shareholders and former creditors have agreed to let the chip maker raise up to $510 million in a rights offer.

Shares of Hynix were trading down 2.2 percent in the morning session, while Samsung was trading down 3.2 percent and Elpida was trading up 11.5 percent.