Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-812]

Dynamic Random Access Memory Semiconductors of One Megabit or

Above From the Republic of Korea; Preliminary Results of Antidumping

Duty Administrative Review

AGENCY: Import Administration/International Trade Administration/

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

-----------------------------------------------------------------------

SUMMARY: In response to requests from three respondents, one U.S.

producer, and several interested parties, the Department of Commerce

(the Department) has conducted an administrative review of the

antidumping duty order on dynamic random access memory semiconductors

of one megabit or above from the Republic of Korea. The review covers

three manufacturers/exporters of the subject merchandise to the United

States for the period of October 29, 1992 through April 30, 1994

We have preliminarily determined that sales have been made below

the foreign market value (FMV). If these preliminary results are

adopted in our final results of administrative review, we will instruct

U.S. Customs to assess antidumping duties equal to the difference

between the United States price (USP) and the FMV. Interested parties

are invited to comment on these preliminary results. Parties who submit

arguments in this proceeding are requested to submit with the argument

(1) a statement of the issue, and (2) a brief summary of the argument.

[[Page 47150]]

EFFECTIVE DATE: September 11, 1995.

FOR FURTHER INFORMATION CONTACT: Thomas F. Futtner, Office of

Antidumping Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue NW., Washington, DC 20230, telephone: (202) 482-

3814.

SUPPLEMENTARY INFORMATION:

Background

On May 10, 1993, the Department of Commerce published in the

Federal Register (58 FR 27520) the antidumping duty order on dynamic

random access memory semiconductors (DRAMS) from the Republic of Korea.

On May 4, 1994, the Department published (59 FR 23051) a notice of

``Opportunity to Request an Administrative Review'' of this antidumping

duty order for the period of October 29, 1992, through April 30, 1994.

We received timely requests for review from Hyundai Electronics

Industries, Co. (Hyundai), Goldstar Electron Co. (Goldstar), and

Samsung Electronics Co. (Samsung). The petitioner, Micron Technologies

Inc., requested an administrative review of these same three Korean

manufacturers of DRAMs. Two interested parties, PNY Electronics and

Pulsar Components International, Inc., requested a review of sixteen

Japanese resellers of Korean DRAMs. However, these two interested

parties subsequently withdrew their request. On June 15, 1994, the

Department initiated a review of the above Korean manufacturers (59 FR

30770). The period of review (POR) for all respondents was October 29,

1992, through April 30, 1994.

The Department is conducting this administrative review in

accordance with section 751(a) of the Tariff Act of 1930, as amended

(the Act). Unless otherwise indicated, all citations to the statute and

to the Department's regulations are in reference to the provisions as

they existed on December 31, 1994.

Scope of the Review

Imports covered by the review are shipments of DRAMs of one megabit

and above from the Republic of Korea (Korea). For purposes of this

review, DRAMs are all one megabit and above DRAMs, whether assembled or

unassembled. Assembled DRAMs include all package types. Unassembled

DRAMs include processed wafers, uncut die and cut die. Processed wafers

produced in Korea, but packaged, or assembled into memory modules in a

third country, are included in the scope; wafers produced in a third

country and assembled or packaged in Korea are not included in the

scope.

The scope of this review includes memory modules. A memory module

is a collection of DRAMs, the sole function of which is memory. Modules

include single in-line processing modules (SIPs), single in-line memory

modules (SIMMs), or other collections of DRAMs, whether unmounted or

mounted on a circuit board. Modules that contain other parts that are

needed to support the function of memory are covered. Only those

modules which contain additional items which alter the function of the

module to something other than memory, such as video graphics adapter

(VGA) boards and cards, are not included in the scope.

The scope of this review also includes video random access memory

semiconductors (VRAMs), as well as any future packaging and assembling

of DRAMs.

The scope of this review also includes removable memory modules

placed on motherboards, with or without a central processing unit

(CPU), unless the importer of motherboards certifies with the Customs

Service that neither it, nor a party related to it or under contract to

it, will remove the modules from the motherboards after importation.

The scope of this review does not include DRAMs or memory modules that

are reimported for repair or replacement.

The DRAMs subject to this review are classifiable under subheadings

8542.11.0001, 8542.11.0024, 8542.11.0026, and 8542.11.0034 of the

Harmonized Tariff Schedule of the United States (HTSUS). Also included

in the scope are those removable Korean DRAMs contained on or within

products classifiable under subheadings 8471.91.0000 and 8473.30.4000

of the HTSUS. Although the HTSUS subheadings are provided for

convenience and customs purposes, the written description of the scope

of this review remains dispositive.

United States Price

In calculating USP, the Department treated respondents' sales as

purchase price, as defined in section 772(b) of the Act, when the

merchandise was sold to unrelated U.S. purchasers prior to importation.

The Department treated respondents' sales as exporter's sale price

(ESP), as defined in section 772(c) of the Act, when the merchandise

was sold to unrelated U.S. purchasers after importation.

We calculated purchase price based on packed, f.o.b., f.c.a., or

c.i.f. prices to unrelated customers in the United States. We made

deductions, where appropriate, for foreign brokerage and handling,

foreign inland insurance, air freight, air insurance, U.S. duties, U.S.

commissions, discounts, and rebates in accordance with section

772(d)(2) of the Act.

We calculated ESP based on packed, ex-U.S. warehouse prices to

unrelated customers in the United States. We made deductions, where

appropriate, for discounts, rebates, foreign brokerage and handling,

foreign inland insurance, air freight, air insurance, U.S. duties,

credit expenses, warranty expenses, royalty payments, U.S. commissions,

advertising and promotion expenses, foreign banking charges, U.S.

subsidiary packing expenses and U.S. and Korean indirect selling

expenses, including inventory carrying costs in accordance with section

772(d)(2) of the Act. For both purchase price and ESP sales, we added

duty drawback, where applicable, pursuant to section 772(d)(1)(B) of

the Act.

We adjusted USP for taxes in accordance with our practice as

outlined in Siliconmanganese from Venezuela, Preliminary Determination

of Sales at Less-Than-Fair-Value (LTFV), 59 FR 31204 (June 17, 1994).

For DRAMs that were further manufactured into memory modules after

importation, we deducted all value added in the United States, pursuant

to section 772(e)(3) of the Act. The value added consists of the costs

of the materials, fabrication, and general expenses associated with the

portion of the merchandise further manufactured in the United States,

as well as a proportional amount of profit or loss attributable to the

value added. See, e.g., Notice of Final Determination of Sales at LTFV;

Certain Hot-Rolled Carbon Steel Flat Product, Certain Cold-Rolled

Carbon Steel Flat Product, Certain Corrosion-Resistant Carbon Steel

Flat Products and Certain Cut-to-Length Carbon Steel Plate from France,

58 FR 37125 (July 9, 1993). Profit or loss was calculated by deducting

from the sales price of the memory module all production and selling

costs incurred by the company for the memory module. The total profit

or loss was then allocated proportionately to all components of cost.

Only the profit or loss attributable to the valued added was deducted.

In determining the costs incurred to produce the memory module, we

included materials, fabrication, and general expenses, including

selling expenses and interest expenses. No other adjustments were

claimed or allowed.

Foreign Market Value

In order to determine whether there were sufficient sales of DRAMs

in the

[[Page 47151]]

home market to serve as a viable basis for calculating FMV, we compared

the volume of home market sales of DRAMs to the volume of third country

sales of DRAMs, in accordance with section 773(a)(1) of the Act. All

three respondents had viable home markets with respect to sales of

DRAMs made during the POR in accordance with 19 CFR 353.48(a). The

Department relied on monthly weighted-average home market prices in the

calculation of FMV.

Because Goldstar made some home market sales to related parties

during the POR, we tested these sales to ensure that, on average, the

related party sales were at arms length. To conduct this test, we

compared the gross unit prices of sales to related and unrelated

customers net of all movement charges, direct and indirect selling

expenses, valued-added tax and packing. See Final Determination of

Sales at LTFV; Certain Cold-Rolled Carbon Steel Flat Products from

Argentina, Appendix II, 58 FR 87062 (July 9, 1993). Based on the

results of that test, we discarded from Goldstar's home market database

all related party sales not made at arm's length. See Notice of Final

Determination of Sales at LTFV; Small Diameter Circular Seamless Carbon

and Alloy Steel, Standard, Line and Pressure Pipe from Brazil, 60 FR

31960, 31971 (June 19, 1995).

Because the Department found sales made at prices less than the

cost of production (COP) during the less than fair value (LTFV)

investigation, in accordance with our standard practice, we found

reasonable grounds to believe or suspect that all three respondents had

made sales at prices below the COP in the home market during the POR.

Thus in accordance with section 773(b) of the Act, we examined whether

the home market sales of each model were made at prices below their COP

in substantial quantities over an extended period of time, and whether

such sales were made at prices which would permit recovery of all costs

within a reasonable period of time in the normal course of trade.

We performed a model-specific COP test, in which we examined

whether each home market sale was priced below the merchandise's COP.

The Department defines COP as the sum of direct material, direct labor,

variable and fixed factory overhead, general expenses, and packaging

costs (19 CFR 353.51(c)(1994)). See Stainless Steel Hollow Products

from Sweden; Preliminary Results of Antidumping Duty Administrative

Review, 59 FR 40521 (August 9, 1994). For each model, we compared this

sum to the reported home market unit price, net of price adjustments

and movement expenses.

For each model where less than ten percent, by quantity, of the

home market sales during the POR were made at prices below the COP, we

included all sales of that model in the computation of FMV. For each

model where ten percent or more, but less than ninety percent, of the

home market sales during the POR were priced below the merchandise's

COP, we excluded from the calculation of FMV those home market sales

which were priced below the merchandise's COP, provided that these

below-cost sales were made over an extended period of time. For each

model where ninety percent or more of the home market sales during the

POR were priced below the COP and were made over an extended period of

time, we disregarded all sales of that model from our analysis. See

Brass Sheet and Strip from Canada: Preliminary Results of Antidumping

Duty Administrative Review, 60 FR 50670 (April 27, 1995).

In order to determine whether below-cost sales had been made over

an extended period of time, we compared the number of months in which

below-cost sales occurred for each product to the number of months

during the POR in which each model was sold. If a product was sold in

fewer than three months during the POR, we did not exclude the below-

cost sales unless there were below-cost sales in each month of sale. If

a product was sold in three or more months, we did not exclude the

below-cost sales unless there were below-cost sales in at least three

months during the POR. Id.

Finally, respondents did not provide any information, nor is there

any information on the record of this proceeding which indicates

recovery of all costs within a reasonable period of time for sales

found to have been made at prices below the cost of production.

Therefore, in accordance with our practice, we have disregarded

respondents' sales found to have been made at prices below the COP in

substantial quantities over an extended period of time, which would not

permit recovery of all costs within a reasonable period of time in the

normal course of trade.

We calculated the COP for the merchandise based on the sum of each

respondent's material costs, fabrication costs and general expenses in

accordance with section 353.51(c) of the Department's regulations (19

CFR 353.51(c) (1994)). We adjusted respondents' cost data as described

below:

For Hyundai, the Department relied on the submitted COP and

constructed value (CV) information, except in the following instances

where the costs were not appropriately quantified or valued:

1. We reclassified certain capitalized costs from R&D to current

costs of production. We recalculated R&D costs to reflect the current

costs incurred for all semiconductors.

2. We revised interest expense to reflect the proportional amount

incurred by the semiconductor business.

For Goldstar, the Department relied on the submitted COP and CV

information, except in the following instances where the costs were not

appropriately quantified or valued:

1. We recalculated R&D costs to reflect the current costs incurred

for all semiconductors.

For Samsung, the Department relied on the submitted COP and CV

information, except in the following instances where the costs were not

appropriately quantified or valued:

1. We recalculated R&D costs to reflect the current costs incurred

for all semiconductors.

2. We revised interest expense to reflect the proportional amount

incurred by the semiconductor business.

When all home market sales of a such or similar product in the

contemporaneous month (as identified in the July 19, 1994 model match

memorandum) were excluded from our analysis because the home market

sales were priced below the COP, or when no home market sales of such

or similar merchandise were found, then we used the CV of the

merchandise sold in the United States as the basis for FMV in

accordance with section 773(e) of the Act. We calculated the CV, in

accordance with section 773(e) of the Act, as the sum of the cost of

manufacture of the product sold in the United States, home market

selling, general and administrative (SG&A) expenses, and home market

profit. The cost of manufacture of the product sold in the United

States is the sum of direct material, direct labor, and variable and

fixed factory overhead expenses. For home market SG&A expenses, in

accordance with section 773(e)(B)(i) of our regulations, we used the

larger of the actual SG&A expenses reported by the respondents or ten

percent of the cost of manufacture, the statutory minimum for foreign

SG&A expenses. For home market profit, in accordance with section

773(e)(B)(ii) of our regulations, we used the larger of the actual

profit reported by the respondents or the statutory minimum of eight

percent of the sum of cost of manufacture and SG&A expenses. See

Polyethylene Terephthalate Film, Sheet, and Strip from the Republic of

Korea; Preliminary Results of Antidumping

[[Page 47152]]

Duty Administrative Review, 59 FR 35098, 35100 (July 8, 1994).

We calculated FMV based on delivered prices to unrelated customers

and, where appropriate, to related customers in the home market. In

calculating FMV, we made adjustments, where appropriate, for inland

freight, inland insurance, discounts, rebates, Korean brokerage and

handling charges, and home market credit expenses. We adjusted for

Korean consumption tax in accordance with our practice as outlined in

Siliconmanganese from Venezuela, Preliminary Determination of Sales at

LTFV, 59 FR 31204 (June 17, 1994). We deducted home market packing

costs from the home market price and added U.S. packing costs to the

FMV. We also made, where applicable, difference-in-merchandise

adjustments.

For comparison to purchase price sales, pursuant to 19 CFR 353.56,

we made circumstance-of-sale adjustments to the FMV, where appropriate,

for bank charges, royalty payments, and advertising. We made further

adjustments, where appropriate, for U.S. commissions and credit

expenses in accordance with 19 CFR 353.56(a)(2). Where commissions were

paid on U.S. sales and not paid on home market sales, we allowed an

offset to FMV amounting to the lesser of the weighted-average home

market indirect selling expenses, or the U.S. commissions in accordance

with 19 CFR 353.56(b) of our regulations.

For comparison to ESP sales, we made deductions, where appropriate,

for credit expenses, royalty payments, bank charges and advertising

expenses. We also allowed an ESP offset to the FMV, amounting to the

lesser of the weighted-average total of home market indirect selling

expenses, or he total U.S. indirect selling expenses plus commissions

in accordance with 19 CFR 353.56(b)(2).

No other adjustments were claimed or allowed.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following margins exist for the POR:

------------------------------------------------------------------------

Manufacturer/exporter Percent margin

------------------------------------------------------------------------

Hyundai Electronics Co., Ltd............. 0.202

(de minimis)

Samsung Electronics Co., Ltd............. 0.9936

(de minimis)

Goldstar Electron Co., Ltd............... 0.319

(de minimis)

------------------------------------------------------------------------

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between the USP and the FMV may vary from the percentages

stated above. Upon completion of the review the Department will issue

appraisement instructions on each exporter directly to the U.S. Customs

Service.

Furthermore, the following deposit requirements will be effective

for all shipments of dynamic random access memory semiconductors of one

megabit and above, assembled or unassembled, entered, or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of this administrative review, as provided by section

751(a)(1) of the Act.

(1) The cash deposit rate for the reviewed companies will be those

rate established in the preliminary results of this review (except that

no deposit will be required for firms with zero or de minimis margins;

i.e., margins less than 0.5%);

(2) For previously reviewed or investigated companies not listed

above, the cash deposit rate will continue to be the company-specific

rate published for the most recent period;

(3) If the exporter is not a firm covered in this review or in the

original LTFV investigation, but the manufacturer is, the cash deposit

rate will be the rate established for the most recent period for the

manufacturer of the merchandise; and

(4) If neither the exporter nor the manufacturer is a firm covered

in this or any previous review conducted by the Department, the cash

deposit rates will be 3.85%, the ``all other'' rate established in the

LTFV investigation.

These deposit requirements shall remain in effect until publication

of the final results of the next administrative review.

Interested parties may request disclosure within five days of the

date of publication of this notice, and may request a hearing within

ten days of the date of publication. Any hearing, if requested, will be

held as early as convenient for the parties but not later than 44 days

after the date of publication or the first work day thereafter. Case

briefs or other written comments from interested parties may be

submitted not later than 30 days after the date of publication of this

notice. Rebuttal briefs and rebuttal comments, limited to issues in the

case briefs, may be filed not later than 37 days after the date of

publication. The Department will publish the final results of this

administrative review, including the results of its analysis of issues

raised in any such written comments.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR

353.22.

Dated: August 16, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-22501 Filed 9-8-95; 8:45 am]

BILLING CODE 3510-05-M