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The U.S. Commerce Department announced Saturday a preliminary ruling to impose countervailing duties on Hynix memory chips for the year 2004, saying South Korean "government authorities" may have provided subsidies to the world's second-largest computer memory chipmaker.

The estimated rate is 31.86 percent for dynamic random access memory (DRAM) semiconductors for the 2004 calendar year. A final ruling is due within 120 days from Friday.

In a notice posted on the Federal Register, the department's International Trade Administration said the latest review did not find evidence of the South Korean government directly providing financial assistance to Hynix.

"In sum, Hynix's improved financial situation in 2004, the lack of evidence demonstrating a GOK (government of South Korea) policy or pattern of practices to entrust or direct Hynix's creditors to provide financial assistance to Hynix in 2004...lead us to conclude that the GOK did not entrust or direct Hynix's creditors to reduce or forgive Hynix's debt in 2004," the notice said.

The department also determined for now that early discounted loan repayment plans extended to Hynix by creditors did not give benefits to the chipmaker and are thus not countervailable.

But as in an earlier review, the department distinguishes between banks found to be "government authorities" as defined under the U.S. Tariff Act of 1930 and banks deemed to be "entrusted or directed" by the South Korean government, it said.

"Therefore, although we have preliminarily determined that the GOK did not entrust or direct non-GOK entities to provide financial contributions in 2004, we must further address whether government authorities provided countervailable subsidies," according to the notice.

The preliminary decision follows allegations of new South Korean subsidies filed by Micron, one of Hynix's competitors, on Jan. 12 this year. The Commerce Department sent questionnaires to the South Korean government and Hynix on the allegations and received responses in June and July.

According to the Federal Register notice, Micron cited various South Korean parliamentary and media reports to allege that formal state subsidies continue for Hynix.

If the preliminary findings are upheld in the final conclusions, the Commerce Department will instruct the the U.S. Customs and Border Protection to liquidate Hynix DRAM shipments for 2004 at a 31.86 percent rate of the invoice price.

The same rate will also apply to shipments that enter after the announcement of the final conclusions.

The Commerce Department also takes issue with South Korea's "21st Century Frontier R&D Program," established in 1999 to promote the country's competitiveness in science and technology.

Hynix had outstanding loans from this program in 2004.

An earlier review determined that the program conferred countervailable benefits to Hynix but not to a proportion requiring duties, it said.

"We calculated a preliminary subsidy rate of less than 0.005 percent ad valorem for this program and, therefore, we did not include this program in our preliminary net countervailing duty rate, which is consistent with our past practice," it said.

Washington, Aug. 12 (Yonhap News)