Initiation of Antidumping Duty Investigation: Dynamic Random Access Memory Semiconductors From Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-832]

Initiation of Antidumping Duty Investigation: Dynamic Random

Access Memory Semiconductors From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Initiation of antidumping investigation.

EFFECTIVE DATE: November 18, 1998.

FOR FURTHER INFORMATION CONTACT: Alexander Amdur at (202) 482-5346,

John Conniff at (202) 482-1009 or Ron Trentham at (202) 482-6320,

Import Administration--Room B099, International Trade Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230.

Initiation of Investigation

The 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

references to the provisions codified at 19 CFR Part 351 (1998).

The Petition

On October 22, 1998, the Department of Commerce (``the

Department'') received a petition filed in proper form by Micron

Technology, Inc. (``petitioner''). The Department received supplemental

information to the petition on November 5, 1998. In accordance with

section 732(b) of the Act, petitioner alleges that imports of dynamic

random access memory semiconductors of one megabit and above

(``DRAMs'') from Taiwan are being, or are likely to be, sold in the

United States at less than fair value within the meaning of section 731

of the Act, and that such imports are materially injuring, or

threatening material injury to, an industry in the United States. The

Department finds that petitioner filed the petition on behalf of the

domestic industry because it is an interested party as defined in

section 771(9)(C) of the Act, and has demonstrated sufficient industry

support with respect to the antidumping investigation it is requesting

the Department to initiate. See Determination of Industry Support for

the Petition below.

Scope of Investigation

The products covered by this investigation are DRAMs from Taiwan,

whether assembled or unassembled. Assembled DRAMs include all package

types. Unassembled DRAMs include processed wafers, uncut die, and cut

die. Processed wafers fabricated in Taiwan, but packaged or assembled

into finished semiconductors in a third country are included in the

scope. Wafers fabricated in a third country and assembled or packaged

in Taiwan are not included in the scope.

The scope of this investigation 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''), dual in-line memory modules

(``DIMMs''), memory cards or other collections of DRAMs whether mounted

or unmounted on a circuit board. Modules that contain other parts that

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

modules that contain additional items that 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. Modules

containing DRAMs made from wafers fabricated in Taiwan, but either

assembled or packaged into finished semiconductors in a third country,

are also included in the scope.

The scope includes, but is not limited to, video RAM (``VRAM''),

Windows RAM (``WRAM''), synchronous graphics RAM (``SGRAM''), as well

as various types of DRAM, including fast page-mode (``FPM''), extended

data-out (``EDO''), burst extended data-out (``BEDO''), synchronous

dynamic RAM (``SDRAM''), and ``Rambus'' DRAM (``RDRAM''). The scope of

this investigation also includes any future density, packaging or

assembling of DRAMs. The scope of this investigation does not include

DRAMs or memory modules that are reimported for repair or replacement.

The DRAMS subject to this investigation are currently classifiable

under subheadings 8542.13.80.05, 8542.13.80.24 through 8542.13.80.34 of

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

included in the scope are Taiwanese DRAM modules, described above,

entered into the United States under subheading and 8473.30.10.90 of

the HTSUS or possibly other HTSUS numbers. Although the HTSUS

subheadings are provided for convenience and customs purposes, the

written description of the scope of this investigation is dispositive.

As we discussed in the preamble to the Department's regulations (62

FR 27323), we are setting aside a period for parties to raise issues

regarding product coverage. The Department encourages all parties to

submit such comments by December 2, 1998. Comments should be addressed

to Import Administration's Central Records Unit at Room 1874, U.S.

Department of Commerce, Pennsylvania Avenue and 14th Street, NW,

Washington, DC, 20230. This period of scope consultation is intended to

provide the Department with ample opportunity to consider all comments

and to consult with parties prior to the issuance of the preliminary

determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that petitions be filed on

behalf of a domestic industry. Section 732(c)(4)(A) of the Act provides

that a petition meets this requirement if the domestic producers or

workers who support the petition account for: (i) at least 25 percent

of the total production of the domestic like product; and (ii) more

than 50 percent of the production of the domestic like product produced

by that portion of the industry expressing support for, or opposition

to, the petition.

Section 771(4)(A) of the Act defines the ``industry'' as the

producers of a domestic like product. Thus, to determine whether the

petition has the requisite industry support, the Act directs the

Department to look to producers and workers who account for production

of the domestic like product. The International Trade Commission

(``ITC''), which is responsible for determining whether ``the domestic

industry'' has been injured, must also determine what constitutes a

domestic like product to define the industry. However, while both the

Department and the ITC must apply the same statutory definition of

domestic like product, they do so for different purposes and pursuant

to separate and distinct authority. In addition, the Department's

determination is subject to limitations of time and information.

[[Page 64041]]

Although this may result in different definitions of the domestic like

product, such differences do not render the decision of either agency

contrary to the law.1

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\1\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.

639, 642-44 (CIT 1988); High Information Content Flat Panel Displays

and Display Glass Therefor from Japan: Final Determination;

Rescission of Investigation and Partial Dismissal of Petition, 56 FR

32376, 32380-81 (July 16, 1991).

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Section 771(10) of the Act defines the domestic like product as ``a

product which is like, or in the absence of like, most similar in

characteristics and uses with, the article subject to an investigation

under this title.'' Thus, the reference point from which the domestic

like product analysis begins is ``the article subject to an

investigation,'' i.e., the class or kind of merchandise to be

investigated, which normally will be the scope as defined in the

petition. As noted earlier, the scope of the petition is limited to

DRAMs of one megabit and above. This is petitioner's sole proposed

domestic like product. The Department has no basis on the record to

find this domestic like product definition clearly inadequate. The

Department has, therefore, adopted the domestic like product definition

set forth in the petition.

In this case, the Department determined that the petition and

supplemental information contained adequate evidence of sufficient

industry support; therefore, polling was not necessary. See Initiation

Checklist, dated November 12, 1998, (public document on file in the

Central Records Unit of the Department of Commerce, Room B-099).

Additionally, no person who would qualify as an interested party

pursuant to section 771(9)(A),(C), or (D) of the Act has expressed

opposition to this petition. Accordingly, the Department determines

that this petition is filed on behalf of the domestic industry within

the meaning of section 732(b)(1) of the Act.

Less Than Fair Value Allegation

Petitioner identified the following Taiwanese producers/exporters

in the petition: Mosel-Vitelic, Inc., Winbond Electronics, Acer

Semiconductor Manufacturing Inc., Powerchip Semiconductor Corp., United

Microelectronics Corporation, Taiwan Semiconductor Manufacturing

Corporation, Macronix International Co., Ltd., Alliance Semiconductor

Corporation, Etron Technology, Inc., Taiwan Memory Technology, Inc. and

G-Link Technology Corp. Petitioner further identified Vanguard

International Semiconductor Corporation (``Vanguard'') and Nan Ya

Technology Corporation (``Nan Ya'') as two major producers/exporters of

DRAMs from Taiwan. Petitioner based export price (``EP'') on price

quotes obtained by petitioner's sales personnel in the ordinary course

of business. These price quotes were for delivery of 4x4 16 Megabit EDO

DRAMs. Petitioner explained that it is Micron's practice to receive

verbal quotes without written documentation and supplied an affidavit

signed by a Micron sales representative attesting to the validity of

the price quotes. All U.S. market price quotes were denominated in

dollars and petitioner made no adjustments to these price quotes.

With respect to normal value (``NV'') petitioner used prices, based

on written price quotes for 4x4 16 megabit EDO DRAMs produced by

Vanguard and Nan Ya. The price quotes were obtained by a private market

research firm. Petitioner made no adjustment to these home market price

quotes.

Petitioner alleged that sales of the foreign like product were made

at prices below the cost of production within the meaning of section

773(b) of the Act and requested the Department to initiate a country-

wide sales below cost investigation. To support this claim, petitioner

compared the home market prices to each company's cost of production

(``COP''). Petitioner calculated the COP for Vanguard and Nan Ya based

on Micron's actual production experience with adjustments for known

differences in costs incurred in Taiwan and the United States.

Petitioner determined the die sizes, mask levels, metal levels, and

process technologies from examination of actual DRAM die from Vanguard

and Nan Ya. For the purposes of the petition, the processing yields

were assumed to be the same as those experienced by Micron. Petitioner

derived labor rates from the Bureau of Labor Statistics. Because the

most recent data available for Taiwan was from 1996, petitioner

adjusted the labor rates for the 1997 inflation rate.

Petitioner adjusted utility expenses using the ratio of U.S. energy

costs to Taiwanese energy costs, based on OECD energy price data. For

Vanguard, petitioner derived general and administrative (``G&A'')

expenses, interest expenses, and research and development (``R&D'')

expenses from the company's financial statements for the six months

ending June 30, 1998. See Exhibit 6 of the petition. Financial

statements for the 1997 fiscal year were not available so these

represent the most recent publicly available financial statements for

Vanguard.

Petitioner was unable to obtain financial statements for Nan Ya and

therefore based its G&A expenses and R&D expenses on Vanguard's

financial statements. Interest expenses were calculated using the 1997

consolidated financial statements of Nan Ya's parent company, Nan Ya

Plastics. See Exhibit 5 of the supplement to the petition.

Petitioner utilized Micron's intellectual property expenses, which

reflect royalties paid to other companies for use of their technology

in DRAM production. Again, petitioner believes that this estimate is

conservative since Micron maintains a larger patent portfolio than

either Vanguard or Nan Ya. By having a smaller patent portfolio,

Vanguard and Nan Ya need more licensing agreements for DRAMs

production.

Petitioner conservatively estimated a profit rate of zero for

constructed value. Because the home market prices of Vanguard and Nan

Ya were lower than the COP, normal value was based on CV for comparison

to the U.S. prices. Petitioner used exchange rates as published by the

Federal Reserve Bank of New York for currency conversions.

Based on comparisons of EP to NV, the petitioner estimated dumping

margins from 48 to 69 percent.

Initiation of Cost Investigations

Pursuant to section 773(b) of the Act, petitioners provided

information demonstrating reasonable grounds to believe or suspect that

sales in the home market of Taiwan were made at prices below the COP

and, accordingly, requested the Department to conduct a country-wide

sales-below-COP investigation in connection with the requested

antidumping investigation in Taiwan. The Statement of Administrative

Action (``SAA''), accompanying the URAA, H.R. Doc. No. 103-316, vol. 1

at 833 (1994), states that an allegation of sales below COP need not be

specific to individual exporters or producers. The SAA also states that

``Commerce will consider allegations of below-cost sales in the

aggregate for a foreign country, just as Commerce currently considers

allegations of sales at less than fair value on a country-wide basis

for purposes of initiating an antidumping investigation.'' Id.

Further, the SAA provides that ``new section 773(b)(2)(A) retains

the current requirement that Commerce have `reasonable grounds to

believe or suspect' that below-cost sales have occurred before

initiating such an investigation.'' Reasonable grounds will ``exist

when an interested party provides specific factual information on costs

and prices, observed or

[[Page 64042]]

constructed, indicating that sales in the foreign market in question

are at below-cost prices.'' Id. Based upon the comparison of the prices

from the petition for the representative foreign like products to its

adjusted costs of production, in accordance with section

773(b)(2)(A)(i) of the Act, we find the existence of ``reasonable

grounds to believe or suspect'' that sales of these foreign like

products in Taiwan were made below their respective COP's. Accordingly,

the Department is initiating the requested country-wide cost

investigation.

Initiation of Antidumping Investigation

We have examined the petition on DRAMs from Taiwan and have found

that it meets the requirements of section 732 of the Act, including the

requirements concerning allegations of the material injury or threat of

material injury to the domestic producers of a domestic like product by

reason of the complained-of imports, allegedly sold at less than fair

value. Therefore, we are initiating an antidumping duty investigation

to determine whether imports of DRAMs from Taiwan are being, or are

likely to be, sold in the United States at less than fair value. Unless

extended, we will make our preliminary determination by April 1, 1999.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the

public version of the petition has been provided to the representatives

of the authorities of Taiwan. We will attempt to provide a copy of the

public version of the petition to each exporter named in the petition

(as appropriate).

ITC Notification

We have notified the ITC of our initiation, as required by section

732(d) of the Act.

Preliminary Determination by the ITC

The ITC will determine by December 7, 1998, whether there is a

reasonable indication that imports of DRAMs from Taiwan are causing

material injury, or threatening to cause material injury, to a U.S.

industry. A negative ITC determination in the investigation will result

in this investigation being terminated; otherwise, the investigation

will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 771 (i) of the Act.

Dated: November 12, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-30855 Filed 11-17-98; 8:45 am]

BILLING CODE 3510-DS-P