WTO sides with Seoul in chip row

Hynix is one of the world's leading memory chip makers

An appeals body of the World Trade Organization (WTO) has upheld a ruling in favour of South Korea in its tariff dispute with Japan.

Seoul argues that Japan's 27.2% import duty on computer chips made by South Korea's Hynix Semiconductors is unfair.

Japan claims that Hynix has gained an advantage over other rival firms by receiving alleged government subsidies.

However, Japan has not been told to lift the duties immediately, and said it may only reduce the tariff levels.

The duty on Hynix's dynamic random access memory (DRAM) chip import was introduced in January 2006.

Two months later South Korea referred the case to the WTO, and in July a lower WTO panel ruled in favour of Hynix.

Calculation problems

"The ruling cited problems in the calculation of the fees," said Masashi Nakazono, a director at Japan's trade ministry.

"It does not necessarily mean the elimination of the tariff."

He added that Tokyo would most likely lower the duty.

Bang Min-ho, a spokesman for Hynix, said after the appeals body ruling that the company, one of the world's leading memory chip makers, had "the legal grounds to officially request that the Japanese government withdraw the tariff".

Hynix shares jumped 7.5% on Thursday, but analysts said the WTO ruling was just one of many factors.

"Today's rise has more to do with hopes of another US Federal Reserve rate cut and strength in the US technology sector," said Lee Min-hee at Dongbu Securities.