Hynix shares tumbled four percent before rebounding to close at 8,330 won, down 1.9 percent, following news of the duties overnight.

The US International Trade Commission (ITC) on Wednesday voted three-to-zero in support of a determination that the semiconductor imports from the major manufacturer were damaging to US industry.

The ITC vote was effectively the final stage in a lengthy process leading to countervailing duties of 44.71 percent on Hynix Semiconductor Inc. exports to the United States.

The Commerce Department had already found that the company's dynamic random access memory (DRAM) semiconductors were unfairly subsidised because Hynix had been bailed out by South Korean banks in which the government held an important stake.

"Hynix is very disappointed by the ITC's affirmative injury determination in the DRAM case," the company said in a statement.

Hynix will receive the ITC's ruling in a couple of weeks and then Hynix will review its options.

"Two options are possible -- appealing the ITC's decision to the Court of International Trade, and/or having the government of Korea appeal the decision to the WTO. Both options could be pursued at the same time," it said.

Hynix said the determination would not result in any significant changes in Hynix's DRAM production or business operation, adding the company would increase the output of DRAMs at its plant in Eugene, Oregon.

The South Korean Ministry of Commerce, Industry and Energy expressed regret at the US finding, noting that Hynix' share in the US market has fallen from 15.8 percent in 1998 to 10.4 percent in 2002.

"It is unfair to hold Hynix responsible for the falls in DRAM prices, which were caused by a global market slump," the ministry said in a statement.

It noted that the South Korean government filed a formal complaint last month with the WTO against the initial US findings.

"Under WTO provisions, the first round of bilateral negotiations is scheduled for August. Should the bilateral talks fail to produce results, a WTO panel would review the case, a procedure lasting a year," it said.

Hynix Semiconductor was rescued in December by a multi billion-dollar bailout arranged by its local creditor banks, which the United States and the European Union see as illegal government subsidies.

Its main lender, Korea Exchange Bank, and other creditors say the government played no role in the rescue package, which was aimed at recovering as much of their loans as possible from Hynix.

They say the bailout -- worth 3.25 trillion won (2.7 billion dollars) -- was made on a purely commercial basis and involved foreign banks, including Citibank.

US semiconductor maker Micron Technology welcomed the ITC and Commerce Department decisions.

"These actions validate that Hynix received billions of dollars in illegal subsidies, reaffirms that free trade must also be fair trade, and demonstrates our government's commitment to enforce trade laws," said Micron Technology chairman, chief executive and president Steve Appleton.

South Korea faces a similar threat from Europe.

The European Commission has called for imposing 34.9 percent countervailing duties on Hynix chips, accusing the firm of receiving illegal subsidies from the South Korean government.

EU members are due to vote on the proposal by August 25.

SPACE.WIRE