Dynamic Random Access Memory Semiconductors from the Republic of Korea: Final Results of Countervailing Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On September 15, 2005, the Department of Commerce (“the Department”) published in the Federal Register its preliminary results of administrative review of the countervailing duty order on dynamic random access memory semiconductors (“DRAMS”) from the Republic of Korea (“Korea”) for the period April 7, 2003, through December 31, 2003. This review covers one company, Hynix Semiconductor, Inc. (“Hynix”).

We gave interested parties an opportunity to comment on the preliminary results. Based on information received since the preliminary results and our analysis of the comments received, the Department has revised the net subsidy rate for Hynix. The final net subsidy rate for the reviewed company is listed below in the section entitled “Final Results of Review.”

EFFECTIVE DATE:

March 21, 2006.

FOR FURTHER INFORMATION CONTACT:

Ryan Langan, Natalie Kempkey, or Andrew McAllister, AD/CVD Operations, Office 1, Import Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-2613, (202) 482-1698, or (202) 482-1174, respectively.

SUPPLEMENTARY INFORMATION:

Background

Since the publication of the preliminary results of this review (see Dynamic Random Access Memory Semiconductors from the Republic of Korea: Preliminary Results of Countervailing Duty Administrative Review, 70 FR 54525 (September 15, 2005) (“Preliminary Results”)), the following events have occurred: On September 16, 2005, the Department had a disclosure meeting with Micron Technology, Inc. (“Micron”) regarding the Preliminary Results calculations (see Memorandum to the File, “Disclosure Meeting with Counsel for Micron Technology Inc.,” dated September 16, 2005). Also, on September 16, the Department revised its August 31, 2005, calculation memorandum (see Memorandum to the File, “Revision of the Preliminary Determination Calculation Memorandum,” dated September 16, 2005).

On October 18, 2005, the Department met with officials from Micron and Infineon Technologies North America Corp. to discuss alleged irregularities with regard to Hynix's payment of countervailing duties (understating entered value). See Memorandum to the File, “Meeting with Counsel for Micron Technology, Inc. and Infineon Technologies North America Corp.,” dated October 20, 2005. As a follow up to the October 18, 2005, meeting, on November 2, 2005, Micron submitted a letter requesting the Department to further investigate Hynix's alleged understatement of entered value.

We invited interested parties to comment on the Preliminary Results. On October 24, 2005, we received a case brief and request for a hearing from Hynix and case briefs from Micron and the Government of Korea (“GOK”). We received rebuttal briefs from Micron and Hynix on November 7, 2005. On November 14, 2005, Micron submitted comments on the bracketing of Hynix's October 24, 2005, case brief.

On November 16, 2005, we extended the time limit for the final results of this administrative review by 60 days (to March 14, 2006), pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (“the Act”). (See Dynamic Random Access Memory Semiconductors from the Republic of Korea: Notice of Extension of Time Limit for Countervailing Duty Administrative Review, 70 FR 69514 (November 16, 2005)).

On November 30, 2005, the Department provided Hynix the opportunity to submit any additional information regarding shipments of subject merchandise to a foreign trade zone (“FTZ”).

On December 6, 2005, the Department asked Micron to identify alleged inconsistencies in Hynix's bracketing. On December 7, 2005, Micron responsed to the Department's December 6, 2005, letter. On December 9, 2005, the Department rejected Hynix' October 24, 2005, case brief due to improper bracketing and requested that Hynix resubmit its case brief. On December 12, 2005, Hynix resubmitted its October 24, 2005, case brief with revised bracketing. On December 14, 2005, Hynix re-filed its December 12, 2005, case brief with additional bracketing revisions.

On December 14, 2005, Hynix also provided a response to the Department's November 30, 2005, letter regarding the company's shipments to an FTZ. On December 23, 2005, the Department gave Micron the opportunity to submit comments on the new factual information contained in Hynix' November 7, 2005, rebuttal brief. On December 30, 2005, Micron submitted comments in response to the Department's December 23, 2005, letter.

A public hearing was held at the Department on January 10, 2006.

Scope of the Order

The products covered by this order are dynamic random access memory semiconductors (DRAMS) from Korea, whether assembled or unassembled. Assembled DRAMS include all package types. Unassembled DRAMS include processed wafers, uncut die, and cut die. Processed wafers fabricated in Korea, but assembled into finished semiconductors (DRAMS) outside Korea are also included in the scope. Processed wafers fabricated outside Korea and assembled into finished semiconductors in Korea are not included in the scope.

The scope of this order additionally includes memory modules containing DRAMS from Korea. A memory module is a collection of DRAMS, the sole function of which is memory. Memory modules include single in-line processing modules, single in-line memory modules, dual in-line memory modules, small outline dual in-line memory modules, Rambus in-line memory modules, and memory cards 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 that contain additional items which alter the function of the module to something other than memory, such as video graphics adapter boards and cards, are not included in the scope. This order also covers future DRAMS module types.

The scope of this order additionally includes, but is not limited to, video random access memory, and synchronous graphics ram, as well as various types of DRAMS, including fast page-mode, extended data-out, burst extended data-out, synchronous dynamic RAM, rambus DRAM, and Double Data Rate DRAM. The scope also includes any future density, packaging, or assembling of DRAMS. Also included in the scope of this order are removable memory modules placed on motherboards, with or without a central processing unit, unless the importer of the motherboards certifies with U.S. Customs and Border Protection (“CBP”) that neither it, nor a party related to it or under contract to it, will remove the modules from the motherboards after importation or, consistent with the Memorandum from Stephen J. Claeys to David M. Spooner, “Final Scope Ruling,” dated January 12, 2006, unless the importer of the motherboards certifies with CBP that the motherboard is being imported for repair or refurbishment, and that neither it, nor a party related to it or under contract to it, will remove the modules from the motherboards after importation, except as necessary in the course of repair or refurbishment of the motherboards, in which case any subject memory modules removed from the motherboards will be destroyed.

The scope of this order does not include DRAMS or memory modules that are re-imported for repair or replacement, as stated in the Final Scope Ruling, provided that the importing company can demonstrate that the DRAMS or memory modules are being re-imported for repair or replacement to the satisfaction of CBP.

The DRAMS subject to this order are currently classifiable under subheadings 8542.21.8005 and 8542.21.8020 through 8542.21.8030 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The memory modules containing DRAMS from Korea, described above, are currently classifiable under subheadings 8473.30.10.40 and 8473.30.10.80 of the HTSUS. Removable memory modules placed on motherboards, described above, are classifiable under subheading 8471.50.0085, 8517.30.5000, 8517.50.1000, 8517.50.5000, 8517.50.9000, 8517.90.3400, 8517.90.3600, 8517.90,3800, 8517.90.4400 and 8543.89.9600. Although the HTSUS subheadings are provided for convenience and customs purposes, the department's written description of the scope of this order remains dispositive.

Scope Rulings

On December 29, 2004, the Department received a request from Cisco Systems, Inc. (“Cisco”), to determine whether removable memory modules placed on motherboards that are imported for repair or refurbishment are within the scope of the countervailing duty (“CVD order”). The Department initiated a scope inquiry pursuant to 19 CFR 351.225(e) on February 4, 2005. On June 16, 2005, the Department issued a preliminary scope ruling, finding that removable memory modules placed on motherboards that are imported for repair or refurbishment are within the scope of the CVD order. See Memorandum from Julie H. Santoboni to Barbara E. Tillman, “Preliminary Scope Ruling,” dated June 16, 2005. On July 5, 2005, and July 22, 2005, comments on the preliminary scope ruling were received from Cisco. On July 6, 2005, and July 15, 2005, comments were received from Micron.

On January 12, 2006, the Department issued a final scope ruling, finding that removable memory modules placed on motherboards that are imported for repair or refurbishment are not within the scope of the CVD order if the importer certifies that it will destroy any memory modules that are removed during repair or refurbishment. See Final Scope Ruling. The scope of the CVD order was clarified to CBP in message number 6037201, dated February 6, 2006.

Period of Review

The period for which we are measuring subsidies, i.e., the period of review (“POR”), is April 7, 2003, through December 31, 2003.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to these administrative reviews are addressed in the March 14, 2006, Issues and Decision Memorandum for the Final Results in the First Administrative Review of the Countervailing Duty Order on Dynamic Random Access Memory Semiconductors from the Republic of Korea (“Decision Memorandum”) to David M. Spooner, Assistant Secretary for Import Administration, which is hereby adopted by this notice. Attached to this notice as an appendix is a list of the issues which parties have raised and to which we have responded in the Decision Memorandum. Parties can find a complete discussion of all issues raised in these reviews and the corresponding recommendations in this public memorandum, which is on file in the Department's Central Records Unit, Room B-099 of the main Department building. In addition, a complete version of the Decision Memorandum can be accessed directly on the Internet at http://ia.ita.doc.gov/frn/index.html . The paper copy and electronic version of the Decision Memorandum are identical in content.

Final Results of Review

In accordance with 19 CFR 351.221(b)(5), we calculated an individual subsidy rate for the producer/exporter, Hynix, subject to this review. For the period April 7, 2003, through December 31, 2003, we find the net subsidy ad valorem rate for Hynix is 58.22 percent.

Assessment Rates

The Department will instruct CBP, within 15 days of publication of these final results, to liquidate shipments of DRAMS by Hynix entered or withdrawn from warehouse, for consumption from April 7, 2003, through December 31, 2003, at 58.22 percent ad valorem of the F.O.B. invoice price. We will also instruct CBP to take into account the “provisional measures cap” in accordance with 19 CFR 351.212(d).

Cash Deposits

The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties at 58.22 percent ad valorem of the F.O.B. invoice price on all shipments of the subject merchandise from Hynix, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review.

We will instruct CBP to continue to collect cash deposits for non-reviewed companies covered by this order at the most recent company-specific rate applicable to the company. Accordingly, the cash deposit rate that will be applied to non-reviewed companies covered by this order will be the rate for that company established in the investigation. See Notice of Amended Final Affirmative Countervailing Duty Determination: Dynamic Random Access Memory Semiconductors from the Republic of Korea, 68 FR 44290 (July 28, 2003). The “all others” rate shall apply to all non-reviewed companies until a review of a company assigned this rate is requested. The Department has previously excluded Samsung Electronics Co., Ltd. from this order. Id.

This notice also serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are issued and published in accordance with section 751(a)(1) of the Act.

APPENDIX I

Comments in the Issues and Decision Memorandum

Comment 1: Entrustment or Direction of the December 2002 Restructuring

A. Government of Korea Policy Towards Hynix

B. Government of Korea Influence of Creditors

C. Government of Korea's Influence over the Creditors' Council

D. The Deutsche Bank Report

Comment 2: Whether the December 2002 Restructuring Was Commercial

Comment 3: Entrustment or Direction of the October 2001 Restructuring

Comment 4: Private and Foreign Banks as Benchmarks

Comment 5: Hynix's Equityworthiness

Comment 6: Hynix's Creditworthiness

Comment 7: Ministerial Error Regarding Financing from Foreign Banks

Comment 8: Ministerial Error Regarding KDB Fast Track Bonds

Comment 9: Adjustment of Benefit to Account for Sale of Hynix's Subsidiaries

Comment 10: Benefits Relating to Creditors Exercising Appraisal Rights

Comment 11: Ministerial Errors Regarding Benchmarks

Comment 12: Value of October 2001 and December 2002 Equity

Comment 13: Timing of Benefits from the December 2002 Restructuring

Comment 14: Benchmark for Creditworthy Companies / Discount Rate for Debt Forgiveness

Comment 15: Ministerial Errors Regarding G7/Highly Advanced National Program

Comment 16: Evasion of the Countervailing Duty Order

Comment 17: Hynix and the Government of Korea's Cooperation and Disclosure of Information