[Federal Register Volume 66, Number 110 (Thursday, June 7, 2001)]
[Notices]
[Pages 30688-30694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-14381]


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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.

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SUMMARY: In response to requests from one manufacturer/exporter and one 
U.S. producer of the subject merchandise, 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 (DRAMs) from the Republic of Korea (Korea). The 
review covers two manufacturers/exporters and six resellers of subject 
merchandise to the United States during the period of review (POR), May 
1, 1999, through December 31, 1999. Based upon our analysis, the 
Department has preliminarily determined that dumping margins exist for 
a manufacturer/exporter and the six resellers during the POR. If these 
preliminary results are adopted in our final results of administrative 
review, we will instruct the United States Customs Service (Customs) to 
assess antidumping duties as appropriate. 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: June 7, 2001.

[[Page 30689]]


FOR FURTHER INFORMATION CONTACT: Paige Rivas or Ron Trentham, AD/CVD 
Enforcement, Office IV, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0651 or (202) 482-6320, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the Tariff Act of 1930, 
as amended (the Act), are references to the provisions as of January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all references to the regulations of the Department are to 
19 CFR part 351 (2000).

Background

    The antidumping dumping duty order for DRAMs from Korea was 
revoked, pursuant to the sunset procedures established by statute, 
effective January 1, 2000. See Dynamic Random Access Memory 
Semiconductors (``DRAMs'') of One Megabit and Above From the Republic 
of Korea; Final Results of Full Sunset Review and Revocation of Order, 
65 FR 1471366 (October 5, 2000). However, we are conducting this review 
of exports of the subject merchandise to the United States by Hyundai 
Electronics Industries Co., Ltd. (Hyundai) and LG Semicon Co., Ltd. 
(LG) during the 8-month period from May 1, 1999, until the effective 
date of the revocation.
    On May 10, 1993, the Department published in the Federal Register 
(58 FR 27250) the antidumping duty order on DRAMs from Korea. On May 
16, 2000, the Department published a notice of ``Opportunity to Request 
an Administrative Review'' of the antidumping duty order on DRAMs from 
Korea (65 FR 31141). On May 31, 2000, the petitioner, Micron Technology 
Inc., (``Micron'') requested an administrative review of Hyundai and 
LG, Korean manufacturers of DRAMs, and six Korean resellers of DRAMs, 
the G5 Corporation (G5), Kim's Marketing, Jewon Trading (Jewon), 
Wooyang Industry Co., Ltd. (Wooyang), Jae Won Microelectronics (Jae 
Won), and Techsan Electronics (Techsan) for the period May 1, 1999, 
through December 31, 1999. Additionally, the petitioner requested a 
cost investigation of LG and Hyundai pursuant to section 773(b) of the 
Act. On May 31, 2000, Hyundai requested that the Department conduct a 
review of its exports of the subject merchandise to the United States. 
On July 7, 2000 (65 FR 131), the Department initiated an administrative 
review of Hyundai, LG, G5, Kim's Marketing, Jewon, Wooyang, Jae Won, 
and Techsan, including cost investigations of Hyundai and LG, covering 
the POR.
    On July 19, 2000, the Department sent Sections A, B, and C 
questionnaires to Hyundai, LG, G5, Kim's Marketing, Jewon, Jae Won, 
Techsan, and Wooyang. On July 31, 2000, the Department sent Sections D 
and E questionnaires to Hyundai and LG. On October 17, 2000, Hyundai 
provided its Sections A, B, C, D, and E questionnaire responses. During 
the instant review, Hyundai acquired LG and included LG's information 
in its questionnaire responses. For a further discussion of Hyundai's 
acquisition of LG, see Affiliation and Collapsing section below.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for issuing a preliminary determination in an 
administrative review if it determines that it is not practicable to 
complete the preliminary review within the statutory time limit of 245 
days. On January 30, 2001, the Department published a notice of 
extension of the time limit for the preliminary results in this case to 
May 30, 2001. See Dynamic Random Access Memory Semiconductors of One 
Megabit or Above (``DRAMs'') From the Republic of Korea: Extension of 
Time Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 66 FR 8198 (January 30, 2001).

Scope of the Review

    Imports covered by the review are shipments of DRAMs from Korea. 
Included in the scope are assembled and unassembled DRAMs. 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; and, 
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 and modules subject to this review are currently 
classifiable under subheadings 8471.50.0085, 8471.91.8085, 
8542.11.0024, 8542.11.8026, 8542.13.8034, 8471.50.4000, 8473.30.1000, 
8542.11.0026, 8542.11.8034, 8471.50.8095, 8473.30.4000, 8542.11.0034, 
8542.13.8005, 8471.91.0090, 8473.30.8000, 8542.11.8001, 8542.13.8024, 
8471.91.4000, 8542.11.0001, 8542.11.8024 and 8542.13.8026 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Although the 
HTSUS subheadings are provided for convenience and customs purposes, 
the Department's written description of the scope of this review 
remains dispositive.

Verification

    As provided in section 782(i) of the Act, from April 23, 2001 to 
April 27, 2001, we verified sales and cost information provided by 
Hyundai, using standard verification procedures, including an 
examination of relevant sales and financial records. Our verification 
results are outlined in the public version of the verification report 
and are on file in the Central Records Unit (CRU) located in room B-099 
of the main Department of Commerce Building, 14th Street and 
Constitution Avenue, NW., Washington, DC.

Facts Available (FA)

1. Application of FA

    Section 776(a)(2) of the Act provides that if any interested party: 
(A) withholds information that has been requested by the Department; 
(B) fails to provide such information in a timely manner or in the form 
or manner requested; (C) significantly impedes an antidumping 
investigation; or (D) provides such information but the

[[Page 30690]]

information cannot be verified, the Department shall use facts 
otherwise available in making its determination.
    On July 19, 2000, the Department sent Hyundai, LG, G5, Kim's 
Marketing, Jewon, Jae Won, Techsan, and Wooyang questionnaires 
requesting that they provide information regarding any sales that they 
made to the United States during the POR. We did not receive any 
replies from G5, Kim's Marketing, Jewon, Jae Won, Techsan, and Wooyang.
    Because G5, Kim's Marketing, Jewon, Jae Won, Techsan, and Wooyang 
have failed to respond to our questionnaires, pursuant to section 
776(a) of the Act, we have applied FA to calculate their dumping 
margins.

2. Selection of Adverse FA

    Section 776(b) of the Act provides that, in selecting from FA, 
adverse inferences may be used against a party that failed to cooperate 
by not acting to the best of its ability to comply with requests for 
information. See also Statement of Administrative Action (SAA) 
accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. 870 
(1994).
    Section 776(b) states further that an adverse inference may include 
reliance on information derived from the petition, the final 
determination, the final results of prior reviews, or any other 
information placed on the record. See also id. at 868. In addition, the 
SAA establishes that the Department may employ an adverse inference 
``to ensure that the party does not obtain a more favorable result by 
failing to cooperate than if it had cooperated fully.'' See SAA at 870. 
In employing adverse inferences, the SAA instructs the Department to 
consider ``the extent to which a party may benefit from its own lack of 
cooperation.'' Id.
    Because G5, Kim's Marketing, Jewon, Jae Won, Techsan, and Wooyang 
did not cooperate by complying with our request for information, and in 
order to ensure that they do not benefit from their lack of 
cooperation, we are employing an adverse inference in selecting from 
among the facts otherwise available. The Department's practice when 
selecting an adverse FA rate from among the possible sources of 
information has been to ensure that the margin is sufficiently adverse 
so ``as to effectuate the purpose of the FA rule to induce respondents 
to provide the Department with complete and accurate information in a 
timely manner.'' See Static Random Access Memory Semiconductors From 
Taiwan; Final Determination of Sales at Less Than Fair Value, 63 FR 
8909, 8932 (February 23, 1998).
    In order to ensure that the rate is sufficiently adverse so as to 
induce cooperation from G5, Kim's Marketing, Jewon, Jae Won, Techsan, 
and Wooyang, we have assigned to these companies, as adverse FA, the 
highest calculated margin from any segment of this proceeding, 10.44 
percent, which is the rate calculated for Hyundai in the fifth 
administrative review. See Dynamic Random Access Memory Semiconductors 
of One Megabit or Above From the Republic of Korea: Final Results of 
Antidumping Duty Administrative Review and Determination Not To Revoke 
the Order in Part, 64 FR 69694 (December 14, 1999) (Final Results 1999)
    Information from prior segments of the proceeding, such as involved 
here, constitutes ``secondary information'' under section 776(c) of the 
Act. Section 776(c) of the Act provides that the Department shall, to 
the extent practicable, corroborate secondary information used for FA 
by reviewing independent sources reasonably at its disposal. The SAA 
provides that to ``corroborate'' means simply that the Department will 
satisfy itself that the secondary information to be used has probative 
value. See SAA at 870. As noted in Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan; Preliminary Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996) (TRBs), to corroborate 
secondary information, the Department will, to the extent practicable, 
examine the reliability and relevance of the information used. However, 
unlike other types of information, such as input costs or selling 
expenses, there are no independent sources from which the Department 
can derive calculated dumping margins; the only source for margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse FA a calculated dumping margin 
from a prior segment of the proceeding, it is not necessary to question 
the reliability of the margin for that time period.
    As to the relevance of the margin used for adverse FA, the 
Department stated in TRBs that it will ``consider information 
reasonably at its disposal as to whether there are circumstances that 
would render a margin irrelevant. Where circumstances indicate that the 
selected margin is not appropriate as adverse FA, the Department will 
disregard the margin and determine an appropriate margin.'' Id.; see 
also Fresh Cut Flowers from Mexico; Preliminary Results of Antidumping 
Duty Administrative Review, 60 FR 49567 (February 22, 1996), where we 
disregarded the highest margin in the case as best information 
available because the margin was based on another company's 
uncharacteristic business expense resulting in an extremely high 
margin.
    As stated above, the highest rate determined in any prior segment 
of the proceeding is 10.44 percent, a calculated rate from Final 
Results 1999. In the absence of information on the administrative 
record that application of the 10.44 percent rate to G5, Kim's 
Marketing, Jewon, Jae Won, Techsan, and Wooyang would be inappropriate 
as an adverse FA rate in the instant review, that the margin is not 
relevant, or that leads us to re-examine this rate as adverse facts 
available in the instant review, we have applied, as FA, the 10.44 
percent margin from a prior administrative review of this order, and 
have satisfied the corroboration requirements under section 776(c) of 
the Act.

Affiliation, Collapsing, and Successorship

    In reviewing Hyundai's questionnaire responses, we noted that the 
process of Hyundai's acquisition of LG began before the POR (5/1/99-12/
31/99). On January 6, 1999, LG announced that it had decided to sell 
all of its shares to Hyundai. Agreement was reached on the price and 
other terms of the purchase in the spring of 1999. On April 20, 1999, 
the purchase price of LG's stock was agreed upon, and LG could no 
longer make any major decisions without the consent of Hyundai. See 
Decision Memorandum: Whether to Collapse Hyundai Electronics Industries 
Co., Ltd. and LG Semicon Co., Ltd. Into a Single Entity, dated May 1, 
2001 (Collapsing Memorandum). The sale was consummated on May 20, 1999, 
when Hyundai purchased stock in LG from LG Group Companies. See 
Hyundai's December 28, 2000, section A supplemental questionnaire 
response at 4 (Supplemental Section A Response). With this initial 
purchase, Hyundai acquired a 58.98 percent interest in LG. Following 
the receipt of antitrust clearances from authorities in United States, 
Europe, and other jurisdictions, Hyundai executives took over the 
direct management of LG's business operations on July 7, 1999. The 
process was completed on October 13, 1999, after conducting the 
administrative procedures for the formal acquisition and merger, 
including public notice and

[[Page 30691]]

adoption of a resolution at a meeting of Hyundai shareholders. While 
the acquisition had not been completed by May 1, 1999, the first day of 
the POR, this information led us to question the appropriateness of 
continuing our analysis of Hyundai and LG as separate entities for any 
part of the POR for the purposes of the preliminary results. In order 
to collect information germane to this issue, we asked several 
questions in our November 20, 2000, supplemental questionnaire 
concerning the collapsing criteria provided for in the Department's 
regulations. Hyundai also provided information relevant to the 
collapsing issue in its response to the Department's section A initial 
questionnaire.
    As discussed below, we have analyzed the information on the record 
in accordance with 771(33) of the Act and section 351.401(f) of the 
Department's regulations. Based on this analysis, we have preliminarily 
determined that Hyundai and LG should be considered a single entity 
with one calculated rate for the entirety of the POR.

A. Hyundai and LG Affiliation

    Pursuant to section 771(33) of the Act, the Department shall 
consider the following persons to be ``affiliated'' or ``affiliated 
persons'':
    (A) Members of a family, including brothers and sisters (whether by 
the whole or half blood), spouse, ancestors, and lineal descendants.
    (B) Any officer or director of an organization and such 
organization.
    (C) Partners.
    (D) Employer and employee.
    (E) Any person directly or indirectly owning, controlling, or 
holding with power to vote, five percent or more of the outstanding 
voting stock or shares of any organization and such organization.
    (F) Two or more persons directly or indirectly controlling, 
controlled by, or under common control with, any person.
    (G) Any person who controls any other person and such other person.
    For the purposes of this paragraph, a person shall be considered to 
control another person if the person is legally or operationally in a 
position to exercise restraint or direction over the other person.
    As noted above, Hyundai's acquisition of LG began in January 1999 
with the announcement that LG had decided to sell all of its shares to 
Hyundai. Then, on April 20, 1999, the purchase price of LG's stock was 
agreed upon, and it was agreed that LG would no longer make any major 
decisions without the consent of Hyundai. On May 20, 1999, Hyundai 
purchased LG's stock and on July 7, 1999, Hyundai took over formal 
management of LG's business operations. The acquisition process was 
completed on October 13, 1999, and on that date LG ceased to exist as a 
separate entity and became a part of Hyundai's operations. Thus, 
pursuant to section 771(33)(E) of the Act, the Department has 
preliminarily determined that Hyundai and LG were affiliated from the 
beginning of the POR until October 13, 1999 because of Hyundai's 
controlling interest in and control of LG.

B. Collapsing Hyundai and LG

    Section 351.401(f) of the Department's regulations outlines the 
criteria for collapsing (i.e., treating as a single entity) affiliated 
producers. Pursuant to section 351.401(f), the Department will treat 
two or more affiliated producers as a single entity where (1) those 
producers have production facilities for similar or identical products 
that would not require substantial retooling of either facility in 
order to restructure manufacturing priorities, and (2) the Department 
concludes that there is a significant potential for the manipulation of 
price or production.
    Pursuant to section 351.401(f)(2), in identifying a significant 
potential for the manipulation of price or production, the Department 
may consider the following factors:
    (i) the level of common ownership;
    (ii) the extent to which managerial employees or board members of 
one firm sit on the board of directors of an affiliated firm; and
    (iii) whether operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated producers.
    To establish the first prong of the collapsing test, pursuant to 
section 351.401(f)(1), the producers must have production facilities 
equipped to manufacture similar or identical products that would not 
require substantial retooling of either facility to restructure 
manufacturing priorities.
    During the period May 1, 1999 through October 12, 1999, LG 
possessed production facilities which manufactured the identical 
subject merchandise as Hyundai. See Hyundai's December 28, 2000, 
section A supplemental questionnaire response at 16 (Supplemental 
Section A Response). In addition, in July 1999, semiconductors produced 
at LG's former facility at Cheongju began to be marketed under 
Hyundai's name, along with semiconductors produced at Hyundai's Ichon 
plant. Id. Therefore, we conclude that Hyundai's and LG's production 
facilities were equipped to manufacture identical products without 
substantial retooling.
    With regard to common ownership, which is one of the factors to be 
considered under 19 CFR 351.401(f)(2)(i), we note, as discussed above, 
Hyundai purchased 58.98 percent of LG's stock on May 20, 1999. See 
Supplemental Section A response at 4.
    With respect to the extent to which there was a management overlap 
between Hyundai and LG, under 19 CFR 351.401(f)(2)(ii), we note that on 
July 7, 1999, Hyundai took over formal management of LG's business 
operations. See Supplemental Section A Response at 17.
    Finally, with regard to 19 CFR 351.401(f)(2)(iii), sharing 
financial information and mutual involvement in pricing decisions would 
be indicative of intertwined operations between companies, on April 20, 
1999, the purchase price of LG's stock was agreed upon and LG agreed to 
make no major business decisions without Hyundai's agreement, thereby 
giving Hyundai implicit control over LG's pricing and marketing. 
Further, Hyundai's purchase of a majority of LG's stock on May 20, 
1999, and its takeover of management of LG's business operations on 
July 7, 1999 gave Hyundai explicit control over LG's pricing and 
marketing.
    During the period in question, based on the factors discussed 
above, we conclude that Hyundai gained complete managerial control of 
LG and ownership and control of LG's production facilities. Therefore, 
we find that there existed significant potential for Hyundai to 
manipulate price or production at LG's facilities.
    Based upon a review of the totality of the circumstances, we 
preliminarily find that collapsing of these two entities for the period 
May 1, 1999 through October 13, 1999, is appropriate in this case under 
19 CFR 351.401(f). For a further discussion on affiliation and 
collapsing, see Collapsing Memorandum.

C. Successorship

    As discussed above, Hyundai purchased LG in 1999. The process of 
acquisition which began in January 1999 was completed on October 13, 
1999. Hyundai integrated LG's operations into its own corporate 
structure and, as of October 13, 1999, LG ceased to exist as a 
corporate entity.
    Although Hyundai did not request that the Department make a 
successorship determination for

[[Page 30692]]

purposes of applying the antidumping duty law, the Department is now 
making such a successorship determination. In determining whether 
Hyundai is the successor to both Hyundai and LG for purposes of 
applying the antidumping duty law, the Department examines a number of 
factors including, but not limited to, changes in: (1) management, (2) 
production facilities, (3) suppliers, and (4) customer base. See, e.g., 
Brass Sheet and Strip from Canada; Final Results of Antidumping Duty 
Administrative Review, 57 FR 20460 (May 3, 1992) (Brass Sheet and Strip 
from Canada); Steel Wire Strand for Prestressed Concrete from Japan, 
Final Results of Changes Circumstances Antidumping Duty Administrative 
Review, 55 FR 28796 (July 13, 1990); and Industrial Phosphorous From 
Israel; Final Results of Antidumping Duty Changes Circumstances Review, 
59 FR 6944 (February 14, 1994). While examining these factors alone 
will not necessarily provide a dispositive indication of succession, 
the Department will generally consider one company to have succeeded 
another if that company's operations are essentially inclusive of the 
predecessor's operations. See, Brass Sheet and Strip from Canada. Thus, 
if the evidence demonstrates, with respect to the production and sale 
of the subject merchandise, that the new company is essentially the 
same business operation as the former company, the Department will 
assign the new company the cash deposit rate of its predecessor.
    With regards to LG, the evidence on the record demonstrates that 
with respect to the production and sale of the subject merchandise, 
Hyundai is the successor to LG. Specifically, the evidence shows that 
Hyundai operates the same production facilities, and has most of the 
same customers, suppliers and management, as LG had. Moreover, 
Hyundai's operations at the former LG facilities remain unchanged, 
except that they now operate under the Hyundai corporate umbrella 
rather than as an independent corporate entity.
    With regards to Hyundai, the evidence on the record demonstrates 
that with respect to the production and sale of the subject 
merchandise, Hyundai is the successor to the former Hyundai. 
Specifically, the evidence shows that Hyundai operates the same 
production facilities, and has most of the same customers, suppliers 
and management, as the former Hyundai had. Moreover, Hyundai's 
operations at the former Hyundai facilities remain unchanged.
    Therefore, since Hyundai's operations are essentially inclusive of 
Hyundai's and LG's former operations, we preliminarily determine that 
Hyundai is the successor to both Hyundai and LG for purposes of this 
proceeding, and for the application of the antidumping law.

Fair Value Comparisons

    To determine whether sales of DRAMs from Korea to the United States 
were made at less than fair value (LTFV), we compared the constructed 
export price (CEP) to the normal value (NV), as described in the CEP 
and NV sections of this notice, below. In accordance with section 
771(16) of the Act, we considered all products as described in the 
``Scope of Review'' section of this notice, above, that were sold in 
the home market in the ordinary course of trade for purposes of 
determining appropriate product comparisons to U.S. sales. Where there 
were no sales of the identical or the most similar merchandise in the 
home market that were suitable for comparison, we compared U.S. sales 
to sales of the next most similar foreign like product, based on the 
characteristics listed in sections B and C of our antidumping 
questionnaire.

CEP

    For Hyundai, in calculating United States price, the Department 
used CEP, as defined in section 772(b) of the Act, because the 
merchandise was first sold to an unaffiliated U.S. purchaser after 
importation. We calculated CEP based on delivered prices to 
unaffiliated customers in the United States.
    We made deductions from the starting price, where appropriate, for 
discounts, rebates, billing adjustments, foreign and U.S. brokerage and 
handling, foreign inland insurance, export insurance, air freight, air 
insurance, U.S. warehousing expense, U.S. duties and direct and 
indirect selling expenses to the extent that they are associated with 
economic activity in the United States in accordance with sections 
772(c)(2) and 772(d)(1) of the Act. These deductions included credit 
expenses and commissions, as applicable, and inventory carrying costs 
incurred by the respondent's U.S. subsidiaries. We added duty drawback 
received on imported materials, where applicable, pursuant to section 
772(c)(1)(B) of the Act.
    For DRAMs that were further manufactured into memory modules after 
importation, we deducted all costs of further manufacturing in the 
United States, pursuant to section 772(d)(2) of the Act. These costs 
consisted of the costs of the materials, fabrication, and general 
expenses associated with further manufacturing in the United States. 
Pursuant to section 772(d)(3) of the Act, we also reduced the CEP by 
the amount of profit allocated to the expenses deducted under section 
772(d)(1) and (2).

Level of Trade (LOT)

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practical, we determined NV based on sales in the comparison market at 
the same LOT as the CEP sales. The NV LOT is that of the starting-price 
sales in the comparison market or, when NV is based on constructed 
value (CV), that of the sales from which we derive selling, general, 
and administrative (SG&A) expenses and profit. For CEP, it is the level 
of the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than the CEP 
sales, we examined stages in the marketing process and selling 
activities along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    We reviewed the questionnaire responses of Hyundai to establish 
whether there were sales at different LOTs based on the distribution 
system, selling activities, and services offered to each customer or 
customer category. For Hyundai, we identified one LOT in the home 
market with direct sales by the parent corporation to the domestic 
customer. These direct sales were made by the respondent 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 the 
respondents were reported as CEP sales. The LOT 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

[[Page 30693]]

Korean company for U.S. CEP sales (as adjusted) and preliminarily 
determine that they are at a different LOT from the Korean company's 
home market sales because the company's CEP transactions were at a less 
advanced stage of marketing. For instance, at the CEP level, the Korean 
company did not engage in any general promotion activities, marketing 
functions, or price negotiations for U.S. sales.
    Because we compared CEP sales to home market sales at a more 
advanced LOT, we examined whether a LOT adjustment may be appropriate. 
In this case, the respondent only sold at one LOT in the home market. 
Therefore, there is no basis upon which the respondent can demonstrate 
a pattern of consistent price differences between LOTs. Further, we do 
not have information which would allow us to examine pricing patterns 
based on the respondent's 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 LOT 
adjustment and the LOT in the home market is at a more advanced stage 
of distribution than the LOT of the CEP sales, a CEP offset is 
appropriate. We applied the CEP offset to adjusted home market prices 
or CV, as appropriate. 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. See the 
Memorandum on LOT for Hyundai, dated May 30, 2001.

NV

Home Market Viability

    In order to determine whether there were sufficient sales of DRAMs 
in the home market to serve as a viable basis for calculating NV, we 
compared the respondent's 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)(C) of the Act. Because the aggregate 
volume of home market sales of the foreign like products for Hyundai 
was greater than five percent of the respective aggregate volume of 
U.S. sales of the subject merchandise, we determined that the home 
market provides a viable basis for calculating NV for the respondent.

Cost of Production (COP)

    We disregarded Hyundai's sales found to have been made below the 
COP in the fifth administrative review, the most recent segment of this 
proceeding for which final results were available at the time of the 
initiation of this review. See Final Results 1999. Accordingly, the 
Department, pursuant to section 773(b) of the Act, initiated a COP 
investigation of the respondent for purposes of this administrative 
review.
    We calculated the COP based on the sum of the costs of materials 
and fabrication employed in producing the foreign like product, SG&A 
expenses, 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. Consistent with previous 
reviews, we compared weighted-average quarterly COP figures for the 
respondent, adjusted where appropriate (see below), to home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP. In determining whether to disregard home market 
sales made at prices below the COP, we examined whether such sales were 
made (1) within an extended period of time in substantial quantities, 
and (2) at prices which permitted the recovery of all costs within a 
reasonable period of time in the normal course of trade, in accordance 
with sections 773(b)(1)(A) and (B) of the Act. See Final Results 1999 
and Dynamic Random Access Memory Semiconductors of One Megabit or Above 
From the Republic of Korea: Final Results of Antidumping Duty 
Administrative Review, 65 FR 68976 (November 15, 2000). In accordance 
with section 773(b)(2)(D) of the Act, we conducted the recovery of cost 
test using annual cost data.
    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 the respondent's sales of a 
given product were at prices below the COP, we found that sales of that 
model were made in ``substantial quantities'' within an extended period 
of time, in accordance with section 773(b)(2)(B) and (C) of the Act. To 
determine whether prices provided for recovery of costs within a 
reasonable period of time, we tested whether the prices which were 
below the per-unit COP at the time of the sale were also below the 
weighted-average per-unit cost of production for the POR, in accordance 
with section 773(b)(2)(D) of the Act. If they were, we disregarded the 
below-cost sales in determining NV.
    We found that for Hyundai, more than 20 percent of its home market 
sales for certain products were made at prices that were less than the 
COP. Furthermore, the prices did not permit the recovery of costs 
within a reasonable period of time. We, therefore, disregarded the 
below-cost sales and used the remaining above-cost sales as the basis 
for determining NV, in accordance with section 773(b)(1). For those 
sales for which there were no comparable home market sales in the 
ordinary course of trade, we compared CEP to CV pursuant to section 
773(a)(4) of the Act.

Adjustments to COP

Depreciation

    Hyundai, consistent with the past review, increased the useful 
lives over which it depreciates certain assets. Our practice, pursuant 
to section 773(f)(1)(A) of the Act and the SAA at 834, is to use those 
accounting methods and practices that respondents have historically 
used. As this is the seventh review of this order, we do not consider 
it appropriate for the respondent to dramatically change the useful 
lives of its assets for antidumping purposes. We find that the useful 
lives that Hyundai adopted for certain assets in 1998 greatly exceed 
the useful lives that it has employed for these assets in the past. 
This is the second time since 1996 that the respondent has extended the 
useful lives of its assets. While the Department accepted the 
respondent's 1996 minor useful life adjustment, the useful lives that 
Hyundai adopted in 1998 are in some instances greater than fifty 
percent longer than the previous useful lives. See Dynamic Random 
Access Memory Semiconductors of One Megabit or Above From the Republic 
of Korea: Final Results of Antidumping Duty Administrative Review, 
Partial Rescission of Administrative Review and Notice of Determination 
Not to Revoke Order 63 FR at 50870-50871 (September 23, 1998) (Final 
Results 1998). Moreover, we do not believe that the useful lives 
Hyundai previously employed were unreasonable, especially considering 
that the company itself argued that the previous useful lives were 
reasonable in Final Results 1998. We therefore adjusted Hyundai's 
reported depreciation expense using the pre-1998 useful lives.

CV

    In accordance with section 773(e) of the Act, we calculated CV 
based on the respondent's cost of materials and fabrication employed in 
producing the subject merchandise, SG&A expenses,

[[Page 30694]]

the profit incurred and realized in connection with the production and 
sale of the foreign like product, and U.S. packing costs. We used the 
cost of materials, fabrication, and G&A expenses as reported in the CV 
portion of the questionnaire response, adjusted as discussed in the COP 
section above. We used the U.S. packing costs as reported in the U.S. 
sales portion of the respondent's questionnaire responses. For selling 
expenses, we used the average of the selling expenses reported for home 
market sales that survived the cost test, weighted by the total 
quantity of those sales. For actual profit, we first calculated, based 
on the home market sales that survived the cost test, 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.

Price Comparisons

    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, in accordance with 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.
    With respect to both CV and home market prices, we made 
adjustments, where appropriate, for inland freight, inland insurance, 
duty adjustments, and discounts. We also reduced CV and home market 
prices by packing costs incurred in the home market, in accordance with 
section 773(a)(6)(B)(i) of the Act. In addition, we increased CV and 
home market prices for U.S. packing costs, in accordance with section 
773(a)(6)(A) of the Act. We made further adjustments to home market 
prices, when applicable, to account for differences in physical 
characteristics of the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act. Additionally, pursuant to section 
773(a)(6)(C)(iii) of the Act, we made an adjustment for differences in 
circumstances of sale by deducting home market direct selling expenses 
(credit expenses, royalty, and bank charges) and adding any direct 
selling expenses associated with U.S. sales not deducted under the 
provisions of section 772(d)(1) of the Act. Finally, we made a CEP 
offset adjustment to account for comparing U.S. and home market sales 
at different levels of trade.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margins exist for May 1, 1999, 
through December 31, 1999:

------------------------------------------------------------------------
                                                                Percent
                    Manufacturer/exporter                        margin
------------------------------------------------------------------------
Hyundai Electronic Industries Co., Ltd.......................       3.01
G5 Corporation...............................................      10.44
Jewon Microelectronics.......................................      10.44
Jae Won......................................................      10.44
Kim's Marketing..............................................      10.44
Techsan......................................................      10.44
Wooyang Industry Co., Ltd....................................      10.44
------------------------------------------------------------------------

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within 5 days of the date of publication of 
this notice. Any interested party may request a hearing within 30 days 
of the date of publication of this notice. Parties who submit arguments 
in this proceeding are requested to submit with each argument: (1) a 
statement of the issue and (2) a brief summary of the argument. All 
case briefs must be submitted within 30 days of the date of publication 
of this notice. Rebuttal briefs, which are limited to issues raised in 
the case briefs, may be filed not later than seven days after the case 
briefs are filed. Further, we would appreciate it if parties submitting 
written comments would provide the Department with an additional copy 
of the public version of any such comments on diskette. A hearing, if 
requested, will be held two days after the date the rebuttal briefs are 
filed or the first business day thereafter.
    The Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of the issues raised in any written comments or at the hearing, within 
120 days from the publication of these preliminary results.
    The Department will not issue cash deposit instructions to Customs 
based on the results of this review. Since the revocation is currently 
in effect, current and future imports of DRAMs from Korea shall be 
entered into the United States without regard to antidumping duties. We 
have already instructed Customs to liquidate all entries as of January 
1, 2000 without regard to antidumping duties.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. 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. We have 
calculated importer-specific ad valorem duty assessment rates based on 
the ratio of the total amount of dumping margins calculated for the 
examined sales to the entered value of sales used to calculate those 
duties. These rates will be assessed uniformly on all entries of each 
particular importer made during the POR.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) of the Department's 
regulations 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 this notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-14381 Filed 6-6-01; 8:45 am]
BILLING CODE 3510-DS-P