SAN FRANCISCO/SEOUL (Reuters) - The United States moved to impose severe penalties on memory chip shipments by South Korea's Hynix Semiconductor Inc. 00660.KS over alleged subsidies, depressing hopes for a chip price recovery.

The news sparked a rise of 10 percent on Wednesday in shares of Micron Technology Inc. MU.N , the principal U.S. dynamic random access memory, or DRAM, maker, which stands to benefit in the case. Micron's stock was up 80 cents to $8.83 in mid-afternoon trade on the New York Stock Exchange.

In a preliminary ruling on Tuesday, the U.S. Department of Commerce found that Samsung Electronics Co. Ltd. 05930.KS had also received subsidies, but analysts did not expect that company to suffer penalties.

The department charged that South Korea had unfairly subsidized memory chips imported into the United States in 2001 and the first half of 2002, injuring the U.S. chip industry.

If the ruling were confirmed, a punitive import duty of 57 percent would be imposed on Hynix in August. South Korean investors had expected a 30 percent duty.

Hynix is facing 30 to 35 percent import duties on similar charges in the European Union, diplomatic sources in Brussels told Reuters two weeks ago.

Industry watchers and government officials said they could not tell what the final U.S. ruling would be, but the company would have to immediately lodge cash deposits with the United States if it wanted to continue selling its products there.

Although the government thought exports would not be immediately hurt, analysts doubted that Hynix would want to lodge the deposits, which would be at least $23 million a month.

"This will be a big headache for Hynix," said Chong Kim, technology analyst at CLSA Emerging Markets in Seoul. "It will have to seek alternatives because it can't sell to the U.S. markets anymore."

The company would have to sell elsewhere as it would not be able to compete in the ultra-competitive memory chip market, where producers struggle to make a profit because of low prices, analysts said.

57 PERCENT SUBSIDIES

The department found that the subsidy rates for DRAM chips, used in computers, had ranged from 0.16 percent for Samsung Electronics to 57.37 percent for Hynix. Duties are not likely to be imposed on Samsung Electronics because the alleged subsidy was found to be small.

The ruling follows a decision in December by the U.S. International Trade Commission that DRAM makers in the United States might have been injured by Korean subsidies. Micron had complained following a failed attempt to acquire key assets of Hynix.

The South Korean government, Samsung and Hynix have all denied the charge, calling the move unjustified and regrettable.

Samsung Electronics is the leader in global DRAM sales, while Micron is No.2 and cash-strapped Hynix fights for the No. 3 spot with Germany's Infineon Technologies AG IFXGn.DE .

Semiconductors are South Korea's biggest export and generated $16.6 billion in overseas sales in 2002. DRAM exports represent 35 percent of total semiconductor exports.

A final ruling is expected from the U.S. Commerce Department on June 16 and the U.S. International Trade Commission on July 31, the Commerce Department said. An order imposing duties could be issued Aug. 7 if the preliminary rulings were upheld.

The European Union also launched an inquiry last July after Germany's Infineon complained. A preliminary EU decision is expected on April 24 after a draft proposal with 30 percent to 35 percent duties was unveiled to member states last month.

"We welcome the decision of the U.S. Department of Commerce," an Infineon spokesman in Munich, Germany, said.

HYNIX KEPT AFLOAT

In its complaint, Micron has alleged that South Korea had provided about $11.8 billion in bailout packages and loan subsidies to its chip makers between Jan. 2001 and July 2002 in violation of U.S. Countervailing Duty Laws.

Hynix, which denies the allegations, has posted huge losses in the past three years and has been kept afloat by multibillion-dollar bailouts from lenders, including government-owned banks.

The U.S. market represents about a quarter of Hynix's total revenues and shipments. It is the home of most of Hynix's top five customers, including computer makers International Business Machines Corp. IBM.N , Hewlett-Packard Co. HPQ.N and Dell Computer Corp. DELL.O .

The South Korean government tried but failed to sell core assets of Hynix to Micron for $3.4 billion last year. Hynix's board of directors vetoed the sale.

"We will seek a solution through bilateral and multilateral frameworks, and may take this case to the World Trade Organization (WTO)," said Kim Jong-kap, deputy minister for industry, technology and e-business.

Shares in Hynix fell to a record low of 135 won a week ago before trading was suspended for recapitalization. Shares have tumbled 50 percent so far this year, pummeled by poor earnings and hefty debts. Samsung closed down 1.8 percent at 279,000 won. (Additional reporting by James Mackenzie in Frankfurt)