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

[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.

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

producer, the Department of Commerce (the Department) is conducting 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 two manufacturers/exporters of the subject

merchandise to the United States for the period of May 1, 1994 through

April 30, 1995. The review indicates that there are no dumping margins

for either manufacturer/exporter during this period of review.

If these preliminary results are adopted in our final results of

administrative review, we will instruct the U.S. Customs Service to

assess antidumping duties equal to the difference between the United

States price and the normal value (NV). 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.

EFFECTIVE DATE: July 9, 1996.

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, N.W., Washington, D.C. 20230, telephone: (202)

482-3814.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 FR 25130).

Background

On May 10, 1993, the Department published in the Federal Register

(58 FR 27250) the antidumping duty order on dynamic random access

memory semiconductors (DRAMS) from the Republic of Korea. On May 10,

1995, the Department published a notice of ``Opportunity to Request an

Administrative Review'' of this antidumping duty order for the period

of May 1, 1994, through April 30, 1995 (60 FR 24831). We received

timely requests for review from three manufacturers/exporters of

subject merchandise to the United States: Hyundai Electronics

Industries Co. (Hyundai), LG Semicon Co., Ltd. (LGS, formerly Goldstar

Electron Co., Ltd.), and Samsung Electronics Co. (Samsung). The

petitioner, Micron Technologies Inc., requested an administrative

review of these same three Korean manufacturers of DRAMS. On June 15,

1995, the Department initiated a review of the above Korean

manufacturers (60 FR 31447). The period of review (POR) for all

respondents was May 1, 1994, through April 30, 1995. The Department has

now conducted this review in accordance with section 751 of the Act.

In addition, on June 26, 1995, we automatically initiated an

investigation to determine if Hyundai and LGS made sales of subject

merchandise below the cost of production (COP) during the POR based

upon the fact that we disregarded sales found to have been made below

the COP in the original less-than-fair-value (LTFV) investigation,

which was the most recent period for which a review had been completed.

Samsung Electronics Co., Ltd. (Samsung), formerly a respondent in

this administrative review, was excluded from the antidumping duty

order on DRAMS from Korea on February 8, 1996. See Final Court Decision

and Partial Amended Final Determination: Dynamic Random Access Memory

Semiconductors of One Megabit and Above From the Republic of Korea, 61

FR 4765 (February 8, 1996). Accordingly, we terminated this review with

respect to Samsung.

[[Page 36030]]

Scope of the Review

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

or 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. The POR is May 1, 1994, through

April 30, 1995.

United States Price

In calculating U.S. price, the Department used constructed export

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

merchandise was first sold to an unaffiliated U.S. purchaser after

importation.

We calculated CEP 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, and U.S. and Korean indirect selling expenses,

including inventory carrying costs in accordance with sections

772(c)(2) and 772(d)(1) of the Act. The U.S. price was increased for

packing expense in accordance with section 772(c)(1) of the Act. We

added duty drawback, where applicable, pursuant to section 772(c)(1)(B)

of the Act. Pursuant to section 772(d)(3) of the Act, we reduced the

United States price by the amount of profit to derive the CEP.

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) 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. 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 value 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.

Normal Value

In order to determine whether there was a sufficient volume of

sales of DRAMS in the home market to serve as a viable basis for

calculating NV, we compared respondents' volume of home market sales of

the foreign like product to the volume of U.S. sales of the subject

merchandise, in accordance with section 773(a)(1)(B) of the Act.

Because the aggregate volume of home market sales of the foreign like

products for all respondents was greater than five percent of the

respective aggregate volume of U.S. sales for the subject merchandise,

we determined that the home market provides a viable basis for

calculating NV for all respondents, in accordance with section

773(a)(1)(C) of the Act.

Because LGS 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, value-

added tax and packing. Based on the results of that test, we discarded

from LGS' home market database all sales made to a related party where

that related party failed the ``arm's-length'' test.

We disregarded many of Hyundai's and LGS' sales found to have been

made below the COP during the original LTFV investigation, the most

recent period for which a review had been completed. Accordingly, the

Department, pursuant to section 773(b) of the Act, initiated COP

investigations of both respondents for purposes of this administrative

review.

We calculated COP based on the sum of the costs of materials and

fabrication employed in producing the foreign like product, plus

selling, general, and administrative expenses (SG&A), and the cost of

all expenses incidental to placing the foreign like product in

condition packed ready for shipment, in accordance with section

773(b)(3) of the Act. We relied on the home market sales and COP

information provided by respondents in the questionnaire responses.

In accordance with section 773(b)(1) of the Act, in order to

determine whether to disregard home market sales made at prices below

the COP, we examined whether, within an extended period of time, such

sales were made in substantial quantities, and whether such sales were

made at prices which permit the recovery of all costs within a

reasonable period of time.

Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20

percent of home market sales of a given model were at prices less than

the COP, we did not disregard any below-cost sales of that model

because the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of home market sales of a given

model were at prices less than the COP, we found that sales of that

model were

[[Page 36031]]

made in ``substantial quantities,''in accordance with section

773(b)(2)(B) of the Act. We then determined whether the below-cost

sales of a given product are at prices which would not permit recovery

of all costs within a reasonable period of time, in accordance with

section 773(b)(2)(D) of the Act. If we found that sales had been made

in ``substantial quantities'' and were not at prices which would permit

recovery within a reasonable period of time, we disregarded the below-

cost sales, in accordance with section 773(b)(1) of the Act, and based

normal value on constructed value (CV).

In accordance with section 773(e) of the Act, we calculated CV

based on respondents' cost of materials and fabrication employed in

producing the subject merchandise, SG&A and profit incurred and

realized in connection with the production and sale of the foreign like

product, and U.S. packing costs. We used the costs of materials,

fabrication, and G&A as reported in the CV portion of the questionnaire

response. We used the U.S. packing costs as reported in the U.S. sales

portion of respondents' questionnaire responses. We based selling

expenses and profit on the information reported in the home market

sales portion of respondents' questionnaire responses. See Certain

Pasta from Italy; Notice of Preliminary Determination of Sales at Less

Than Fair Value and Postponement of Final Determination, 61 FR 1344,

1349 (January 19, 1996). For selling expenses, we used the average of

above-cost per-unit HM selling expenses weighted by the total quantity

of home market sales sold. For actual profit, we first calculated the

difference between the home market sales value and home market COP, and

divided the difference by the home market COP. We then multiplied this

percentage by the COP for each U.S. model to derive an actual profit.

For both respondents, the Department relied on the submitted COP

and CV information. There were no adjustments to respondents' reported

COP and CV data.

For price-to-price comparisons, we based NV on the price at which

the foreign like product is first sold for consumption in the exporting

country, in the usual commercial quantities and in the ordinary course

of trade, and to the extent practicable, at the same level of trade, as

defined by section 773(a)(1)(B)(i) of the Act. We compared the U.S.

prices of individual transactions to the monthly weighted-average price

of sales of the foreign like product. We calculated NV based on

delivered prices to unrelated customers and, where appropriate, to

related customers in the home market. In calculating NV, we made

adjustments, where appropriate, for inland freight, inland insurance,

discounts, rebates, and Korean brokerage and handling charges.

Both respondents only had CEP sales during the POR. For comparisons

to CEP sales, we reduced NV, where appropriate, for home market credit

expenses, advertising expenses, royalty expenses, and bank charges in

accordance with section 773(a)(6) of the Act, due to differences in

circumstances of sale. We also reduced NV by packing costs incurred in

the home market, in accordance with section 773(a)(6)(B)(i) of the Act.

In addition, we increased NV for U.S. packing costs, in accordance with

section 773(a)(6)(A) of the Act. We also made further adjustments, when

applicable, to account for differences in physical characteristics of

the merchandise, in accordance with 19 CFR 353.57 of the Department's

regulations.

Level of Trade and CEP Offset

As set forth in section 773(a)(2)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) accompanying the Uruguay Round

Agreements Act, at 829-831, to the extent practicable, the Department

will calculate NV based on sales at the same level of trade as the U.S.

sale. When the Department is unable to find sale(s) in the comparison

market at the same level of trade as the U.S. sale(s), the Department

may compare sales in the U.S. and foreign markets at a different level

of trade.

In accordance with section 773(a)(7)(A) of the Act, if we compare a

U.S. sale at one level of trade to normal value sales at a different

level of trade, the Department will adjust the NV to account for the

difference in level of trade if two conditions are met. First, in order

to determine that there are distinct levels of trade, there must be

differences between the actual selling functions performed by the

seller at the level of trade of the U.S. sale and at the level of trade

of the NV sale. Second, the differences must affect price comparability

as evidenced by a pattern of consistent price differences between sales

at the different levels of trade in the market in which normal value is

determined. When constructed export price is applicable, section

773(a)(7)(B) of the Act establishes the procedures for making a

constructed export price offset when: (1) NV is at a different level of

trade, and (2) the data available do not provide an appropriate basis

for a level of trade adjustment. Also, in accordance with section

773(a)(7)(B), to qualify for a CEP offset, the level of trade in the

home market must constitute a more advanced stage of distribution than

the level of trade of the CEP sales.

In order to identify levels of trade, the Department must review

information concerning selling functions of the manufacturer/exporter.

We reviewed the questionnaire responses of both respondents to

establish whether there were sales at different levels of trade based

on selling functions performed and services offered to each customer or

customer class. For both respondents, we identified one level of trade

in the home market with direct sales by the parent corporation to the

domestic customer. These direct sales were made by both respondents to

original equipment manufacturers (OEMs) and to distributors. In

addition, all sales, whether made to OEM customers or to distributors,

included the same selling functions. For the U.S. market, all sales for

both respondents were reported as CEP sales. The level of trade of the

U.S. sales is determined for the sale to the affiliated importer rather

than the resale to the unaffiliated customer. We examined the selling

functions performed by the Korean companies for U.S. CEP sales and

preliminarily determine that they are at a different level of trade

from the Korean companies' home market sales because the Korean

companies engaged in fewer selling functions for the adjusted CEP sales

than for their home market sales. For instance, the Korean companies

did not engage in any general promotion, marketing activities, or price

negotiations for U.S. sales.

Because we compared CEP sales to home market sales at a different

level of trade, we examined whether a level of trade adjustment may be

appropriate. In this case, both respondents only sold at one level of

trade in the home market; therefore, there is no basis upon which

either respondent can demonstrate a consistent pattern of price

differences between levels of trade. Further, we do not have

information which would allow us to examine pricing patterns based on

the respondents' sales of other products and there is no other record

information on which such an analysis could be based. Because the data

available do not provide an appropriate basis for making a level of

trade adjustment but the level of trade in the HM is a more advanced

stage of distribution than the level of trade of the CEP sales, a CEP

offset is appropriate. Both respondents claimed a CEP offset. We

applied the CEP offset to normal value or constructed value, as

appropriate. The level of trade

[[Page 36032]]

methodology employed by the Department in these preliminary results of

review is based on the facts particular to this review. The Department

will continue to examine its policy for making level of trade

comparisons and adjustments for its final results of review.

Because both respondents made sales at differing levels of trade in

the home market and in the United States, and because we determined it

was not possible to quantify the price differences resulting from the

differing levels of trade, we made a CEP offset to NV for both

respondents pursuant to section 773(a)(7)(B) of the Act. The CEP offset

consisted of an amount equal to the lesser of the weighted-average U.S.

indirect selling expenses and U.S. commissions or home market indirect

selling expenses. No other adjustments were claimed or allowed.

Fair Value Comparisons

To determine whether sales of DRAMS by respondents to the United

States were made at less than fair value, we compared the CEP to the

NV, as described in the ``United States Price'' and ``Normal Value''

sections of this notice. In accordance with section 777A(d)(2), we

calculated monthly weighted-average prices for NV and compared these to

individual U.S. transactions.

Preliminary Results of the Review

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

following weighted-average dumping margins exist for the POR:

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

Percent

Manufacturer/exporter margin

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

Hyundai Electronic Industries, Inc........................... 0.00

LG Semicon Co., Ltd.......................................... 0.00

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

The Department shall determine, and Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between United States price and NV may vary from the percentages stated

above. The Department will issue appraisement instructions directly to

Customs. The final results of this review shall be the basis for the

assessment of antidumping duties on entries of merchandise covered by

the determination and for future deposits of estimated duties.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of these administrative reviews

for all shipments of DRAMs from Korea entered, or withdrawn from

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

results of these administrative reviews, as provided by section

751(a)(1) of the Act: (1) The cash deposit rates for Hyundai and LGS,

because their weighted-average margins were de minimis, will be zero

percent; (2) for merchandise exported by manufacturers or exporters not

covered in this review but covered in the original LTFV investigation

or a previous review, the cash deposit will continue to be the most

recent rate published in the final determination or final results for

which the manufacturer or exporter received a company-specific rate;

(3) if the exporter is not a firm covered in this review, a previous

review, or the original investigation, but the manufacturer is, the

cash deposit rate will be that established for the manufacturer of the

merchandise in the final results of the most recent review, or the LTFV

investigation; and (4) if neither the exporter nor the manufacturer is

a firm covered in this or any previous reviews, the cash deposit rate

will be 3.85 percent, the ``all-others'' rate established in the LTFV

investigation. These deposit requirements, when imposed, 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 of this notice. 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(b) 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: June 27, 1996/

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-17462 Filed 7-8-96; 8:45 am]

BILLING CODE 3510-DS-P