US launches probe into alleged patent violation by Samsung

United States authorities have launched a probe into an alleged patent infringement by Samsung Electronics for its lucrative semiconductor business, raising further concerns about the Trump administration’s growing pressures on its major trade partner South Korea.

The International Trade Commission (ITC) probe was announced on October 31 after US semiconductor packaging firm Tessera Advanced Technologies accused Samsung of violating patents regarding wafer level packaging. Wafer level packaging is a technology that simplifies the packaging of wafers and reduces the volume of finished products.

Tessera asked the ITC to ban sales of Samsung chips and smartphones, tablet PCs and laptops that use the chips. The company said the power management integrated circuits of the Galaxy S8 and Note 8 smartphones was a case of patent infringement.

On September 28, Tessera sued Samsung and some affiliates for infringements of as many as 24 patents related to bonding, packaging and imaging technologies with the ITC, three federal state courts and some international tribunals.

The ITC is investigating two of the 24 patents alleged to have been violated. Under US customs law, the ITC is authorised to order bans on imports of goods that are found to have infringed US patents.

In 2013, the authority banned imports of Samsung’s Galaxy S, S2, Nexus smartphones and Galaxy Tab, judging that the Korean tech titan violated Apple’s patents. Samsung declined to comment on the issue, saying “We don’t have any comment to make on pending legal issues”.

“The fact that the ITC has begun to inspect the case tells that the US authority believes the petition has some reasonable ground,” said Junsok Yang, professor of economics at Catholic University of Korea.

“Although the patent infringement is an issue between a company and another, once it is petitioned to the ITC, the Trump administration is very likely to use it a means to put more pressures on its trade partners.”

Another US chipmaker Netlist requested an ITC investigation into SK hynix on October 31, accusing the second largest memory chipmaker in Korea of infringing two patents owned by the company regarding memory modules.

The ITC hasn’t yet decided to investigate SK hynix. SK hynix has been in a legal battle with the US firm since last September.

The Korean company believes it was an additional action by Netlist to win the case. “US semiconductor-related businesses are increasingly monitoring Korean chipmakers these days due to our outstanding technologies and market influence,” said an industry insider.

Expanding US protectionism

Such moves in the US semiconductor industry reflect expanding protectionism in trade against US’ trade partners across industries ranging from steelmaking to consumer electronics.

A public hearing was held on October 19 by the ITC in order to discuss imposition of safeguard restrictions on washers manufactured by Samsung and LG Electronics.

On October 12, Whirlpool had asked the ITC for a punitive tariff of 50 per cent on Samsung and LG’s washing machines and parts over the next three years, which the Korean firms responded to sensitively, rebutting Whirlpool’s claim, since the US was their largest market.

However, at the hearing, South Carolina Governor Henry McMaster and other congressmen opposed the trade restriction on the Korean companies, saying it would only increase consumer prices, reduce consumer choices and constrict foreign investment in the US.

The ITC is set to vote on its decision on November 21 and make a written recommendation to President Donald Trump by December 4.

The White House will have six days to review the recommendation and make a final decision. Korean steelmaker Posco was slapped with an 11.7 percent tariff on its cut-to-length plates by the US Department of Commerce in March, a penalty breaking down into a 7.39 per cent anti-dumping tariff and a 4.31 per cent countervailing duty.

Posco opened a special office in Washington, early this year to monitor moves in the US steel industry and government policies on trade. “Export conditions to the US have been aggravated this year, but we are trying to maintain good relations with US customers,” an industry official.