Korean chipmakers facing EU probe


Samsung is the world's largest producer of 'dynamic random access memory' chips

SEOUL, South Korea -- Memory chipmakers Samsung and Hynix are facing a European Union probe over suspected Government subsidies, Seoul's Commerce Ministry told Reuters on Wednesday.

The investigation follows a complaint filed by German chipmaker Infineon in June over a suspicion of unfair practices.

Shares in both companies fell heavily Wednesday, with Hynix down 9.7 percent and Samsung off 2.81 percent.

Seoul's Kospi index closed down 2.97 percent to 721.41.

'We haven't provided any subsidies'

A spokesman from the South Korean Commerce Ministry told Reuters: "The EU recently notified us of its decision."

"Of course, we made it clear that we haven't provided any subsidies."

The EU is expected to send a delegation to South Korea in the next two to three months for an investigation.

"We have nothing to do with the issue," said Samsung spokesman James Chung. "We haven't heard anything from the EU."

U.S. probe also underway

Samsung is the world's largest memory chipmaker while rival Hynix ranks third behind Micron Technology of the U.S. Infineon is in fourth place.

All three companies are already facing a probe by U.S. anti-trust investigators over alleged collusion with five other memory chip companies to fix prices. (full story)

Japan's Elpida Memory, Micron Technology of the U.S. and Taiwan's Winbond Electronics and Nanya Technologies are also part of the investigation.

It is unclear exactly what type of antitrust action the Justice Department is undertaking.

Creditor support for Hynix

According to the Commerce Department official, the EU also took issue with financial support for Hynix from creditors.

A spokesman for Hynix said: "We are not concerned with the issue as we haven't received any subsidies from the government."

State-run banks were among the South Korean creditors that took control of Hynix, while lenders gave debt write-offs, rollovers, and swapped debt into three trillion won in Hynix exchangeable bonds now turned into equity.

"It was done by creditors, not by the Government," added the ministry official. "It was inevitable in the process of restructuring."

Reuters contributed to this report.