E6-19292. Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea; Notice of Amended Final Results Pursuant to Court Decision

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On July 31, 2006, the United States Court of International Trade (CIT) sustained the final remand redetermination made by the Department of Commerce (the Department) pursuant to the CIT's third remand of the final results of the May 1, 1999—December 31, 1999 administrative review of dynamic random access memory semiconductors of one megabit or above (DRAMs) from the Republic of Korea (Korea). See Hynix Semiconductor, Inc., Hynix Semiconductor America, Inc. v. United States and Micron Technology, Inc., 442 F. Supp. 2d 1359 (Ct. Int'l Trade 2006) (Hynix IV). Because all litigation in this matter has now concluded, the Department is now issuing its amended final results in accordance with the CIT's decision.

EFFECTIVE DATE:

November 15, 2006.

FOR FURTHER INFORMATION CONTACT:

Maisha Cryor or Mark Manning, AD/CVD Operations, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Ave., NW, Washington, DC 20230; telephone: [phone] or 482-3814, respectively.

SUPPLEMENTARY INFORMATION:

Background

On October 12, 2001, the Department published a notice of final results of the antidumping duty administrative review of DRAMs from Korea covering the period May 1, 1999 through December 31, 1999. See Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Final Results of Antidumping Duty Administrative Review, 66 FR 52097 (October 12, 2001) (Final Results). Subsequently, Hynix Semiconductor, Inc. (Hynix) filed suit at the CIT contesting the Final Results.

In these Final Results, the Department stated that: (1) ”. . .as a result of the continually changing methodology we found that the reduced R&D costs recognized by Hyundai and LG Semicon Co. Ltd. (LG),^[1] through the amortization and deferral of their R&D expenses, and resulting allocation of R&D expenses to merchandise, does not reasonably reflect the cost of producing the subject merchandise.” See Final Results and accompanying Decision Memorandum at Comment 2; (2) ”. . .we have continued to allocate all semiconductor R&D expenses over the total semiconductor cost of goods sold, a methodology which does not overstate costs, but which we believe reasonably and accurately identifies the R&D expenses attributable to subject merchandise.” See Final Results and accompanying Decision Memorandum at Comment 3; and (3) “ {w} e also based depreciation. . . on the pre-1998 useful lives employed by Hyundai because. . .we believe that the useful lives adopted in 1999, and the resulting depreciation, are distortive.” See Final Results and accompanying Decision Memorandum at Comment 5.

In January 2003, the CIT remanded the Department's Final Results in Hynix Semiconductor, Inc., Hynix Semiconductor America., Inc. v. United States and Micron Technology, Inc., No. 01-00988, Slip Op. 03-13 (Ct. Int'l Trade 2003) (Hynix I). In Hynix I, the CIT ordered the Department to: (1) reconsider and further explain why the use of Hynix's amortized R&D costs would not reasonably reflect Hynix's actual R&D expenses for this period of review, and to identify what distortions, if any, would arise in the cost of production (COP) calculation if amortized R&D costs were used; and to reconsider and address Hynix's assertion that all 1996 R&D costs that should have been carried forward into this period of review, if amortized, were fully taken into account prior to or within the Fifth Administrative Review, when the Department used expensed R&D costs in the COP calculation; (2) reconsider and further explain why Hynix's deferral of certain R&D costs does not reasonably reflect the R&D costs related to the subject merchandise; (3) further explain whether the subject merchandise has benefitted from R&D activities for non-memory products and identify substantial evidence in the record to justify this conclusion; and (4) explain how the revised average useful lives (AULs) reported by Hynix are not standard industry practice; how and where in the record Hynix's reported AULs were overstated; and whether the use of Hynix's reported AULs would not reasonably reflect depreciation in the COP. See Hynix I at 2-3.

In the Department's first redetermination on remand, Final Results of Redetermination Pursuant to Court Remand; Hynix Semiconductor, Inc., Hynix Semiconductor America., Inc. v. United States and Micron Technology, Inc. (June 6, 2003) (Remand Results), the Department, as ordered by the CIT, fully explained, and supported with substantial evidence, its positions regarding Hynix's R&D costs and AULs. As a result, the Department reached the same conclusions it reached in the Final Results, namely that: (1) Hynix's amortization of its R&D costs does not reasonably reflect Hynix's actual R&D expenses for this period of review; (2) Hynix's deferral of certain R&D costs does not reasonably reflect the R&D costs related to the subject merchandise; (3) Hynix's production of subject merchandise has benefitted from R&D activities for non-memory products; and (4) the use of Hynix's reported AULs does not reasonably reflect the cost of production.

On November 23, 2003, the CIT remanded the Department's Remand Results. See Hynix Semiconductor, Inc., Hynix Semiconductor America., Inc. v. United States and Micron Technology, Inc., No. 01-00988, Slip Op. 03-152 (Ct. Int'l Trade 2003) (Hynix II). Specifically, the CIT sustained the Department's findings that Hynix's indefinite deferral of certain R&D expenses does not accurately reflect Hynix's cost of producing the subject merchandise for this period of review. See Hynix II at 9. In Hynix II, however, the CIT again remanded the Department's findings regarding Hynix's amortization of R&D costs, cross-fertilization and AULs.

On December 12, 2003, the petitioner submitted comments on the CIT's findings in Hynix II. Specifically, the petitioner addressed each of the remanded issues and suggested that the Department reopen the administrative record and send a questionnaire to Hynix concerning these issues. The Department declined to reopen the administrative record for further information given the CIT's findings in Hynix II and the specific directions contained in the CIT's remand order of November 24, 2003.

In its Final Results of Redetermination Pursuant to Court Remand: Hynix Semiconductor, Inc, Hynix Semiconductor America, Inc. v. the United States and Micron Technology, Inc. (Court No. 01-00988) (December 17, 2003) (Final Results of Remand), the Department, unable to provide further support, recalculated Hynix's R&D costs to exclude R&D costs for non-subject merchandise; recalculated Hynix's R&D costs to allow for amortization, and; recalculated Hynix's AULs to allow for its reported accounting adjustment. The CIT affirmed the Department's final results of redetermination in their entirety and the case was dismissed. See Hynix Semiconductor, Inc., v. United States, 318 F. Supp. 2d 1314 (Ct. Int'l Trade 2004) (Hynix III).

In Hynix III, the CIT noted that Micron had pointed out a possible clerical error in the calculation of the assessment rate. The CIT stated that it had found no indication that Micron had brought this clerical error to the Department's attention prior to filing comments to the Final Results of Remand. Further, the CIT stated that the Department had made no mention of the clerical error in the Final Results of Remand and that Hynix had not mentioned the clerical error in their comments to the Final Results of Remand. However, the CIT noted that Micron had notified the Department of this error three days after the Department had issued the Final Results in October 2001. The Department agreed with Micron and corrected the error, noting that correction of the error “would have no impact on the dumping margin and would not require publication of amended final results.” The CIT declined to address this issue but left it to the Department to determine whether there was a clerical error, as alleged by Micron, and to correct that error as it deemed appropriate. On April 19, 2004, consistent with the decision of the U.S. Court of Appeals for the Federal Circuit, in Timken Co. v. United States, 893 F. 2d 337 (Fed. Cir. 1990), the Department notified the public that the CIT's decision was “not in harmony” with the Department's Final Results. See Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Notice of Court Decision and Suspension of Liquidation, 69 FR 20856 (April 19, 2004).

Subsequent to the Hynix III decision, Hynix appealed the CIT's decisions to the Court of Appeals for the Federal Circuit (Federal Circuit) and Micron cross-appealed. On appeal, the Federal Circuit affirmed the use of Hynix's product-specific R&D expenses and the disallowance of the indefinite deferral of certain R&D. The Federal Circuit reversed the CIT's decision requiring the Department to accept Hynix's amortized R&D expenses and remanded the case to the CIT with instructions to remand the case to the Department to recalculate Hynix's weighted-average antidumping duty by expensing Hynix's R&D costs as in the Final Results. See Hynix Semiconductor, Inc. v. United States, 424 F 3d 1363 (Fed. Cir. 2005) (Hynix Semiconductor) at 1369-1373.

Upon consideration of the decision by the Federal Circuit in Hynix Semiconductor, the CIT ordered that the Final Results of Remand be remanded to the Department. In its remand, the CIT instructed the Department to recalculate Hynix's weighted-average antidumping duty by expensing R&D cost in a manner consistent with the decision by the Federal Circuit.

On March 31, 2006, the Department issued its Final Results of Redetermination Pursuant to Court Remand; Hynix Semiconductor, Inc., Hynix Semiconductor America, Inc., v. United States and Micron Technology, Inc. (Final Results of Remand II). In the Final Results of Remand II, the Department recalculated Hynix's weighted-average antidumping duty by expensing R&D costs in accordance with the decision by the Federal Circuit.

On July 31, 2006, the CIT found that the Department complied with the CIT's remand order in Hynix III and sustained the Department's Final Results of Remand II. See Hynix IV, 442 F. Supp. 2d 1359 (Ct. Int'l Trade 2006). We are issuing these amended final results to reflect the results of the remand determination because no party has further appealed and there is now a final and conclusive decision in the court proceeding.

Amended Final Results of Review

We are amending the final results of the May 1, 1999—December 31, 1999 administrative review of the antidumping duty order on DRAMs from Korea. The weighted-average antidumping duty for Hynix is 2.70 percent.

In sum, these amended final results of review differ from the Final Results in that, pursuant to instructions from the CIT, the Department calculated Hynix's R&D expenses based upon product-specific costs and used Hynix's reported AULs. See Hynix III; see also Hynix IV.

Assessment

The Department shall determine, and the U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. In accordance with section 351.212(b)(1) of the Department's regulations, we have calculated importer-specific assessment rates by dividing the dumping margins found on the subject merchandise examined by the estimated entered value of such merchandise. Where the importer-specific assessment rates are above de minimis, we will instruct CBP to assess antidumping duties on that importer's entries of subject merchandise. The Department intends to issue assessment instructions to CBP 15 days after the date of publication of these amended final results of review.

These amended final results of administrative review are issued and published in accordance with section 516A(c)(1) of the Act.

Dated: November 6, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Footnotes

1.  After the Fifth Administrative Review was completed, respondent Hyundai acquired LG. Subsequent to the acquisition, the name of the combined company was changed to Hynix Semiconductor, Inc.