65 FR 34439, May 30, 2000 A-580-812 Sunset Review Public Document MEMORANDUM TO: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Sunset Review of Dynamic Random Access Memory Semiconductors ("DRAMs") of One Megabit and Above from the Republic of Korea; Preliminary Results Summary We have analyzed the substantive responses and rebuttals of interested parties in the sunset review of the antidumping duty order covering DRAMs of one megabit and above from the Republic of Korea (64 FR 59160). We recommend that, for our preliminary results, you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in this sunset review for which we received substantive responses and rebuttals by parties: 1. Likelihood of continuation or recurrence of dumping Weighted-average dumping margin Volume of imports Other factors 2. Magnitude of the margin likely to prevail Margins from investigation Use of a more recent margin Duty absorption History of Order: The antidumping duty order on DRAMs from the Republic of Korea ("ROK") was published in the Federal Register on May 10, 1993. (1) In that order, the Department found that the weighted-average dumping margins for LG Semicon Co., Ltd. ("LGS") (also known as Goldstar Electron), Hyundai Electronics Co., Ltd. ("Hyundai"), and all others are 4.28, 5.15, and 4.55 percent ad valorem, respectively. (2) The Department has conducted several administrative reviews of the order. (3) The order remains in effect for all manufacturers and exporters of DRAMs from the ROK, except for Samsung which was excluded from the order. (4) In its latest administrative review, the Department determined that Hyundai (and LGS) had absorbed antidumping duties assessed against the subject merchandise during the review period 1997 through 1998. (5) Background: On November 2, 1999, the Department initiated a sunset review of the antidumping duty order on DRAMs from the ROK (64 FR 59160) pursuant to section 751(c)(6)(A)(i) of the Tariff Act of 1930, as amended ("the Act"). On November 16, 1999, the Department received a Notice of Intent to Participate on behalf of Micron Technology, Inc. ("Micron"), (6) within the applicable deadline specified in section 351.218(d)(1)(i) of the Sunset Regulations. Micron claims interested-party status under section 771(9)(C) of the Act as a U.S. manufacturer of DRAMs. Micron indicates that it is not related to a foreign producer or exporter of the subject merchandise; furthermore, Micron notes that it is not an importer or related to any U.S. importer of DRAMs. We received a complete substantive response to the notice of initiation from Micron on December 2, 1999. In its substantive response, Micron indicates that it was a party to the original investigation and, to date, it fully participated in all subsequent administrative reviews of the order. The Department received a complete, joint substantive response on behalf of Hyundai Electronics Industries, Co., Ltd. ("HEI") and Hyundai Electronics America ("HEA") (collectively referred to as "Hyundai") (7) on December 2, 1999. Hyundai claims its interested-party status as a foreign manufacturer/exporter and a U.S. importer of DRAMs under section 771(9)(A) of the Act. In its substantive response, Hyundai states that it was a respondent in the original investigation and a participant in all subsequent administrative reviews as well as other segments of the proceeding. Hyundai further notes that, together with newly acquired LGS, it accounts for virtually 100 percent of the total exports of subject merchandise to the United States. Finally, both Micron and Hyundai indicate that they are willing to participate fully in the instant review by providing any information requested by the Department. We received rebuttal comments on behalf of both Micron and Hyundai on December 14, 1999. (8) Based on the U.S. Customs data and the information provided by Hyundai regarding Hyundai's exports of the subject merchandise to the United States, we determined that Hyundai accounts for significantly more than 50 percent of the ROK's total exports of DRAMs to the United States over the five calendar years preceding the year in which the Department initiated the sunset review; i.e., Hyundai's response is adequate. Because Hyundai provided an adequate response to the notice of initiation, we determined to conduct a full (240-day) sunset review in accordance with section 351.218(e)(2)(i) of the Sunset Regulations. In accordance with section 751(c)(5)(C)(v) of the Act, the Department may treat a review as extraordinarily complicated if it is a review of a transition order -- an order which was in effect on January 1, 1995, see section 751(c)(6)(C) of the Act. The Department determined that the sunset review of the antidumping duty order on DRAMs from the ROK is extraordinarily complicated. This review concerns a transition order within the meaning of section 751(c)(6)(C)(ii) of the Act. Therefore, on February 25, 2000, the Department extended the time limit for completion of the preliminary results of this review until not later than May 22, 2000, in accordance with section 751(c)(5)(B) of the Act. (9) Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this sunset review to determine whether revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping. Section 752(c) of the Act provides that, in making this determination, the Department shall consider the weighted-average dumping margins determined in the investigation and subsequent reviews and the volume of imports of the subject merchandise for the period before and the period after the issuance of the antidumping duty order. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the International Trade Commission ("the Commission") the magnitude of the margin of dumping likely to prevail if the order is revoked. Below we address the comments and rebuttals of interested parties. 1. Likelihood of continuation or recurrence of dumping Interested Parties' Comments: Micron argues that Hyundai's dumping of subject merchandise would be likely to continue, recur, or intensify if the order is revoked. In support of its argument, Micron points to the Department's findings in the two most recent administrative reviews, in which the Department determined that Hyundai continued to dump the subject merchandise at levels above de minimis. (10) Micron contends that because Hyundai has been increasing rather than decreasing its dumping of the subject merchandise during the last two review periods (to such an extent that Hyundai now has a higher weighted-average dumping margin than that of the original investigation), the Department should find that Hyundai is likely to continue dumping DRAMs in the United States if were the order revoked. (See Micron's December 2, 1999 substantive response at 1 - 8.) As for import volumes of the subject merchandise, Micron emphasizes the difficulty it faces ascertaining exact figures of the subject merchandise in light of the fact that (1) a large portion of the subject merchandise comes to the United States with non-subject merchandise in a basket category (e.g., a significant volume of DRAMs come to the United States as memory modules) and (2) available public information does not exclude Samsung's exports of DRAMs, which are no longer a part of the subject merchandise. Micron claims that, therefore, it can only comment on the trends of import volumes of the subject merchandise if and when Hyundai includes Hyundai's export volumes of the subject merchandise in Hyundai's substantive response. Id. In its substantive response, Hyundai argues that continuation or recurrence of dumping is not likely if the order is revoked. Hyundai does not attempt to support its arguments with the historical values of the weighted-average dumping margins and/or import volumes of the subject merchandise; instead, Hyundai primarily relies on other factors to buttress its arguments while contending that good cause exists for the Department to consider such other factors. According to Hyundai, in the instant sunset review, a set of unique competitive dynamics and the highly cyclical nature of the DRAMs industry render the Department's standard procedure of analyzing only the weighted-average dumping margins and import volumes of the subject merchandise inappropriate. Hyundai contends that if the Department were to consider other relevant factors, the Department would find that revocation of the order would not be likely to lead to resumption of dumping. (See Hyundai's December 2, 1999, substantive response at 1-60.) Specifically, Hyundai primarily relies on three assertions to predicate its contention that revocation of the order will not lead Hyundai to dump DRAMs in the United States. First, Hyundai claims that it is optimistic that the future market condition for DRAMs in the United States can be characterized as an excess of demand over supply (market upturn). (11) Second, Hyundai argues that each time the Department previously found Hyundai was dumping at levels above de minimis, the U.S. DRAMs market was experiencing downturns (12) (during the period of the investigation and the periods of fourth and fifth administrative review). Third, Hyundai claims that when the U.S. DRAMs market was experiencing an expansion or market upturn (during the first, second, and third administrative review periods), Hyundai did not engage in dumping; furthermore, Hyundai contends that this behavior was acknowledged by the Department in its third administrative review. (13) Id. Next, Hyundai attempts to justify its dumping of the subject merchandise by bridging the Department's two previous findings: (1) the DRAMs industry is highly cyclical in nature; and (2) because DRAMs are commodity goods, manufacturers/resellers of DRAMs are aggressive in pricing their products during a downturn in order to stay competitive and maintain their customer base. (14) Hyundai argues that, therefore, it could not help but sell DRAMs below cost during a downturn just as all other manufacturers/resellers sold their DRAMs below cost. Id. Hyundai argues that, by the same token, during a period of upturn, Hyundai will not sell below cost because the manufacturers/resellers of DRAMs (including Hyundai) can raise prices and/or profits significantly. According to Hyundai, not only is this reasoning supported by the evidence of the zero or de minimis margins found by the Department in its first, second, and third administrative reviews, but such reasoning also is supported by Hyundai's contention that every manufacturer/reseller of DRAMs sells below cost during a downturn; i.e., it is necessarily true that during an upturn, a DRAMs manufacturer/reseller would sell above cost. Assuming that the Department would adopt Hyundai's argument that a DRAMs manufacturer/reseller would sell above cost, Hyundai presents a number of expert opinions, forecasts, and research data, (15) which purportedly indicate that the U.S. DRAMs market will experience a dramatic upturn in the near future. Id. Hyundai argues that, consequently, the weighted-average dumping margins attributed to Hyundai during the market downturns (periods of investigation and fourth and fifth administrative reviews) have little probative value in predicting Hyundai's future pricing behavior during a prospective upturn in the U.S. DRAMs market. Alternatively, Hyundai contends that it did not dump the subject merchandise when the DRAMs market was in periods of upturn and that many industry experts and forecasters predict an upturn for the DRAMs market in the near future. Hence, Hyundai asserts that it need not sell DRAMs below normal value in the U.S. market and that, therefore, it is not likely to dump the subject merchandise in the near future if the order were revoked. With respect to good cause argument, Hyundai asserts that (1) the prospective dramatic change in market conditions in the U.S. DRAMs market (a future upturn), and (2) the effects of such change upon pricing of DRAMs provide good cause for the Department to deviate from its standard analysis of likelihood of dumping and to consider other factors. Id. In addition, Hyundai asserts that, in principle, the Department is required to consider such factors as future market dynamics and economic factors in conducting a sunset review, because the relevant statues, regulations, and policies require the Department to determine whether revocation of the order would be likely to lead to continuation or recurrence of dumping; i.e., a sunset-review analysis is forward looking. Furthermore, insofar as the Department engaged in predicting the future market trends of DRAMs, as well as the future pricing behaviors of Korean manufacturers/exporters of DRAMs, in its third administrative review, Hyundai argues that the Department also should predict, in the instant sunset review, Hyundai's likely future pricing behavior in the proposed upturn market were the order revoked. Id. Hyundai further claims that (1) its ownership of a U.S. manufacturing facility, in and of itself, (2) a large investment ($1.4 billion) it made in establishing such a facility (as a part of overall strategy to shift a substantial portion of its U.S. supply of DRAMs from the production facilities in the ROK to one in the United States), and (3) a myriad of difficulties it experienced before the facility became fully operational, make it less likely that Hyundai would ship the subject merchandise at less than normal value if the order is revoked. Hyundai notes that the aforementioned U.S. facility already accounts for 70 percent of Hyundai's 64 megabit DRAMs sales to the United States and that, in the future, Hyundai's U.S. shipments of Korean DRAMs will continue their steep decline. Id. Hyundai also contends that its exports of DRAMs to the United States are only a minor portion of its total shipments of the like product to the world. Hyundai asserts that, consequently, even if the order is revoked (together with the fact that it has only a limited ability to increase its shipments of DRAMs because it is already either at or near full capacity), its obligations and commitments to other markets around the world will prevent Hyundai from increasing its shipments of the subject merchandise to the United States by dumping; i.e., Hyundai will not jeopardize its interests in other markets just to increase dumping of the subject merchandise in the United States. Id. Finally, Hyundai states that the recent (from 1997 to 1998) steep depreciation of the Korean currency against the U.S. dollar afforded Hyundai more flexibility in terms of pricing. Hyundai argues that the depreciation of the Korean currency, which has since stabilized at a significantly lower rate than that of the 1994-1996 period, makes Hyundai less likely to dump the subject merchandise in the future. Id. In its rebuttal, Micron claims that because Hyundai failed to show good cause in Hyundai's substantive response, the Department should not deviate from its standard analysis. Micron further contends that, in the past, many experts were consistently wrong in predicting the future market performance of DRAMs; (16) hence, the Department should not make its decision on the basis of unreliable speculation about future market conditions for DRAMs in the United States. Micron states that, moreover, there is no statutory support for Hyundai's contention that the Department should incorporate predictions about the future market condition for DRAMs in making its sunset determination. In effect, Micron dismisses Hyundai's premise that the Department's primary task in the instant review is to predict the future market condition of DRAMs; instead, Micron claims that forecasting future market conditions is not even one of the Department's tasks in a sunset review. (See Micron's December 14, 1999, reply comments at 1-38.) In its rebuttal, Micron takes issue with Hyundai's attempt to advance a notion that the DRAMs market is currently experiencing and will continue to encounter strong demand (therefore higher prices and/or revenue) in the foreseeable future. First, Micron contends that, in general, professional industry-watchers have been repeatedly wrong in the past and that, as a result, their predictions are nothing more than hunches. Second, Micron indicates that Hyundai was selective in presenting information, thereby misleading the Department. (17) Third, Micron alleges that, overall, Hyundai is being overly optimistic by exaggerating the positive aspects while downplaying the negative aspects of the results of various studies. (18) Fourth, Micron argues that DRAMs prices actually have decreased since November 18, 1999. Fifth, Micron asserts that Hyundai's ownership of a U.S. facility has no bearing upon the instant review because the existence of a U.S. facility does not lessen the likelihood that the DRAMs manufactured in the ROK will be dumped in the United States. (19) Last, Micron contends that Hyundai's arguments regarding Hyundai's commitment to other markets, its limited capacity to expand its production, and its pricing flexibility due to the depreciation of Korean currency, are not supported by the facts of the case. Id. Assuming, arguendo, the Department entertains the predictions about future market condition for DRAMs, as Hyundai suggested, Micron claims that an appropriate demarcation point for the market trend is January 1, 2000, because that is the effective date for revocation, should the Department revoke the order. (20) Put differently, in analyzing market trends for DRAMs, Micron urges the Department to focus on the first half of 2000, rather than on the latter half of 2000, or even later, as Hyundai suggests. Micron contends that if the Department adopts Micron's suggestion, the Department will find, based on data presented by Hyundai, that the DRAMs market will continue to be in a serious state of oversupply with sharply declining prices. Id. In its rebuttal, Hyundai argues that continued dumping of the subject merchandise would be contrary to its own interests and would be irrational because continued dumping by Hyundai would suggest that Hyundai is competing against its own U.S. operation. Furthermore, since forecasters uniformly predict a strong DRAMs market in the future, since Hyundai is substantially committed to other markets, and since it does not have any excess capacity to produce additional DRAMs at a significant volume, Hyundai deems its future dumping of the subject merchandise simply "hard to imagine." (See Hyundai's December 14, 1999, rebuttal comments at 1-14.) Specifically, Hyundai contends that its ownership of the 1.4 billion dollar U.S. facility, which already produces 70 percent of Hyundai's total sales of 64-megabit DRAMs in the United States, reflects its deliberate strategy to shift U.S. sales of DRAMs from Hyundai's Korean production facilities to the U.S. production facility. Next, Hyundai reiterates its previous contention that the DRAMs market will experience a major upturn, by citing the following: (1) the Commission, in its recent decision in the Taiwanese DRAMs case, found that the supply shortages in the DRAMs market and resulting high prices are more significant, pervasive, and of longer duration than what can be explained as seasonal and/or one-time factors; (21) (2) all major market forecasters for DRAMs predict an extended period of excess demand starting in 2000; and (3) the growing investors' confidence in Micron and resulting increase in Micron's stock price indicate a higher expectation for increased profits in the DRAMs market, in general. Id. In addition, Hyundai notes that, historically, it has not dumped during periods of tight supply and that it cannot expand its shipments to the United States because it has prior commitments to other markets and because its production is near full capacity in the ROK. Hyundai asserts that, thus, Micron's claim that Hyundai would intensify dumping of the subject merchandise should the Department revoke the order is without merit. Id. Department's Position: Drawing on the guidance provided in the legislative history accompanying the Uruguay Round Agreements Act ("URAA"), specifically the Statement of Administrative Action ("the SAA"), H.R. Doc. No. 103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 (1994), and the Senate Report, S. Rep. No. 103-412 (1994), the Department issued its Sunset Policy Bulletin providing guidance on methodological and analytical issues, including the basis for likelihood determinations. In its Sunset Policy Bulletin, the Department indicated that determinations of likelihood will be made on an order-wide basis (see section II.A.2). In addition, the Department indicated that normally it will determine that revocation of a antidumping duty order is likely to lead to continuation or recurrence of dumping where (a) dumping continued at any level above de minimis after the issuance of the order, (b) imports of the subject merchandise ceased after the issuance of the order, or (c) dumping was eliminated after the issuance of the order and import volumes for the subject merchandise declined significantly (see section II.A.3). Consistent with section 752(c) of the Act, we have considered whether dumping continued at any level above de minimis after the issuance of the order. Although the Department found that Hyundai and LGS discontinued dumping the subject merchandise during the first three consecutive administrative review periods, 1992-1994, 1994-1995, and 1995-1996, for the next two administrative review periods, 1996-1997 and 1997-1998, the Department determined that Hyundai and LGS had resumed dumping the subject merchandise in the United States. (22) With respect to import volumes of the subject merchandise, we agree with Micron that it is difficult to determine exactly how much Hyundai is exporting to the United States because (1) DRAMs enter the United States both as individual units as subject merchandise as well as a part of a basket category (e.g., a significant volume of DRAMs come to the United States as memory modules), and (2) available figures on total exports of DRAMs from the ROK also include Samsung's non-subject DRAMs. (23) Nonetheless, since the import volume of the subject merchandise is not a contentious issue (i.e., Micron, in its rebuttal, does not dispute Hyundai's data pertaining to the import volume of the subject merchandise except to argue that LGS was trying to circumvent the antidumping duty order by not reporting LGS' share of sales to resellers), we elect to employ the numbers presented in Hyundai's substantive response. According to Hyundai, the average import volume of the subject merchandise during the period 1994 through 1998 is substantially greater than that of 1991, the year preceding the initiation of the investigation. Consequently, we preliminarily determine that the import volume of the subject merchandise has increased after the issuance of the order. In section II.C. of the Sunset Policy Bulletin, the Department explained that it will consider other factors in a sunset review if the Department determines that an interested party provides information or evidence (i.e., good cause) that would warrant the Department's consideration of such other factors in question. Hyundai claims that the anticipated dramatic change in market conditions (market upturn) in the near future, in general, and resulting effects on pricing of DRAMs, in particular, are good cause for the Department to deviate from its usual analysis and instead focus on other market and economic factors. (See section II.C of the Sunset Policy Bulletin.) In light of the findings of dumping by Hyundai in the two most recent reviews, we question whether the general information Hyundai has presented about possible future market conditions provides good cause to look at additional information beyond the history of the order. Moreover, as shown in the following paragraphs, even assuming arguendo that Hyundai had established good cause, we are not persuaded for purposes of this preliminary determination that the evidence presented by Hyundai regarding possible future events is sufficient to outweigh the recent dumping findings. In particular, we agree with Micron that, in the past, Hyundai and the experts it has cited have misdiagnosed the direction of the future DRAMs market with their forecasts. (24) For example, during the third administrative review, Hyundai argued that the DRAMs market was projected to improve and, therefore, it was not likely to dump going forward. However, Hyundai's prediction was not accurate: the market actually went into a downturn and Hyundai was subsequently found to be dumping. Moreover, as indicated by Micron, some of the experts' reports cited by Hyundai contain important caveats about the future (e.g., Dataquest notes that its positive prediction could be negatively affected by any number of factors, such as already aggressive pricing practices, lower consumption stemming from a depressed economy, changes in consumption patterns, and DRAM overcapacity). Thus, the Department believes that reliance upon prediction made by the experts Hyundai has cited is unwarranted. As to Hyundai's ownership of a U.S. facility and its reliance on our decision in the preliminary determination of Brass Sheet and Strip from the Netherlands, 64 FR 46637 (August 26, 1999) ("BSS"), first, we must note that BSS was a preliminary determination, the results of which were reversed in our final determination. Moreover, the underlying facts between BSS and in the instant review are different in several important ways. In BSS, a smaller Dutch company (OBV) became a sister company to a much bigger U.S. company (American Brass) which could satisfy the demand in the U.S. market; and, in BSS, immediately after the acquisition, imports of the subject merchandise basically ceased. However, these facts are not present in the instant review. Hyundai has continued to export large volumes of the subject merchandise after completing its U.S. facility; compared to the production capacity of Hyundai in Korea, Hyundai's U.S. facility is very small. With respect to Hyundai's argument that the depreciation the won gives more flexibility in pricing and, therefore, makes less likely that Hyundai will dump, Hyundai's own data indicate that the Korean currency, since bottoming out in early 1998, is showing a trend of appreciation. (25) Also, the depreciation of won coincided with the latter part of the fifth administrative review (i.e., the early part of 1998) in which the Department found the highest dumping margins, to date, for Hyundai. Therefore, because the two most recent administrative reviews indicate that dumping of the subject merchandise has resumed at levels above de minimis, (26) the Department preliminarily determines that recurrence or continuation of dumping of DRAMs from the ROK is likely if the order is revoked. 2. Magnitude of the margin likely to prevail Interested Parties' Comments: Micron states that the Department should select the margin likely to prevail from the final results of the fifth and most recent administrative review covering 1997-1998 because the Department found that Hyundai had absorbed duties imposed upon its exports of DRAMs to the United States and that Hyundai had increased its dumping during the reviewed period. (See Micron's substantive response at 9-10.) Hyundai urges the Department to select the margin likely to prevail that reflects the expected market upturn. Hyundai further contends that because the U.S. DRAMs market has begun a prolonged upturn (as proposed by Hyundai in the Likelihood section above) and because Hyundai does not dump during a market upturn, the Department should provide the Commission a margin of zero or de minimis calculated in the first through third administrative reviews because those three review periods were characterized by an expanding DRAMs market. Alternatively, Hyundai suggests that the Department calculate a simple average of Hyundai's (27) weighted-average margins calculated by the Department in the original investigation and in the first through fourth administrative reviews as the likely-to-prevail margin. (See Hyundai's substantive response at 60-62.) In its rebuttal, Micron argues that the likely-to-prevail margin selected by the Department should not reflect an upturn because the proposed expanding market condition is speculative and not established by the record. Furthermore, Micron notes that (1) the industry analysts, cited by Hyundai, foresee a continuing depressed market in early 2000 and (2) the DRAMs market will not necessarily turn around because those experts have incorrectly predicted a market upturn for each of the last four years. Instead, reiterating an argument in its substantive response, Micron contends that the Department should report to the Commission the weighted- average margins found in the fifth administrative review. (See Micron's reply comments at 38-39.) In its rebuttal comments, Hyundai contends that the weighted-average margins attributed to the fifth administrative period are simply not appropriate for the year 2000. Hyundai indicates that the earliest time the Department can reach the final results of the instant review is June 2000, and that, therefore, the Department should choose a margin which would reflect market conditions at that time. (28) Since, according to its projection, the DRAMs market will be booming in the second half of 2000, Hyundai contends that the Department should use margins in the range of 0.00 to 0.10 percent, which are margins reflecting expanding market periods. Conversely, Hyundai argues that the margin from the fifth administrative review is not indicative of the margin that is likely to prevail since the period of review (1997-1998) was a well-documented period of a downturn. (See Hyundai's rebuttal comment at 14-16.) Department's Position: In the Sunset Policy Bulletin, the Department stated that it will normally provide to the Commission the margin that was determined in the final determination in the original investigation. Further, for companies not specifically investigated or for companies that did not begin shipping until after the order was issued, the Department normally will provide a margin based on the all-others rate from the investigation. (See section II.B.1 of the Sunset Policy Bulletin.) Exceptions to this policy include the use of a more recently calculated margin, where appropriate, and consideration of duty absorption determinations. (See sections II.B.2 and 3 of the Sunset Policy Bulletin.) The Department, in its notice of the antidumping duty order on DRAMs from the ROK, as amended, established the weighted-average dumping margins of 4.28, 5.15, and 4.55 percent for LGS, Hyundai, and all others, respectively. The Department also found a duty absorption in the fifth administrative review. (29) Consistent with the statute and the Sunset Policy Bulletin, we will notify the Commission of the Department's findings of duty absorption so that the Commission can consider our duty- absorption findings in conducting its sunset review. Section II.B.2 of the Sunset Policy Bulletin, reflecting the SAA at 890- 891, House Report at 63-64, and Senate Report at 52, provides that the Department may provide to the Commission a more recently calculated higher margin, in response to argument from an interested party, if a particular company increased its dumping in order to maintain or increase its market share. Although Micron suggests that the Department report to the Commission the margins from the latest administrative review, Micron does not claim that Hyundai has attempted to increase Hyundai's market share in the United States. Moreover, Micron has not provided the Department with information pertaining to Hyundai's relative market shares of DRAMs in the U.S. market for the relevant periods. As a result, but for the consideration of duty-absorption findings, the Department would have determined that, were the orders revoked, the likely-to-prevail dumping margins for all Korean manufacturers/exporters of the subject merchandise would be those from the original investigation. Section II.B.3.b of the Sunset Policy Bulletin, reflecting the SAA at 885, and the House Report at 60, provides that, if the Department has found duty absorption, (30) the Department will normally provide to the Commission the higher of the margin that the Department otherwise would have reported to the Commission or the most recent margin for that company adjusted to account for the Department's findings on duty absorption. The Department explained that it will normally adjust a company's most recent margin to reflect the Department's findings on duty absorption by incorporating the amount of duty absorption on those sales for which the Department found duty absorption. Consistent with the Sunset Policy Bulletin, we adjusted the most recent margin for Hyundai to account for duty-absorption findings: the adjusted rate for Hyundai is 20.88 percent. (See Memorandum to File Regarding Calculation of the Likely to Prevail Margins.) (31) For Hyundai, this absorption-adjusted rate is higher than its rate found in the original investigation. For all other resellers, which were not subject to duty- absorption findings but were subject to administrative review(s) at one time or another, we are selecting the all-others rate from the original investigation pursuant to section II.B.1 of the Sunset Policy Bulletin. (32) Therefore, we will report to the Commission the rates contained in the Final Results of Review section of this notice. Preliminary Results of Review We preliminarily determine that revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping at the following percentage weighted-average margins: ________________________________________________________________________ Manufacturer/exporter Margin (percent) ŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻŻ Hyundai ---------------------------------------------------------- 20.88 All Others ------------------------------------------------------- 4.55 ________________________________________________________________________ Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish notice of these preliminary results of review in the Federal Register. AGREE____ DISAGREE____ _________________________________________ Troy H. Cribb Acting Assistant Secretary for Import Administration _________________________ (Date) __________________________________________________________________________ footnotes: 1. See Antidumping Duty Order and Amended Final Determination: Dynamic Random Access Memory Semiconductors of One Megabit and Above from the Republic of Korea, 58 FR 27520 (May 10, 1993), as amended, Court Decision and Suspension of Liquidation: Dynamic Random Access Memory Semiconductors of One Megabit and Above From the Republic of Korea, 60 FR 62385 (December 6, 1995), as amended, 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). Also see, August 24, 1995, Redetermination on Remand: Final Redetermination of Sales at Less Than Fair Value Dynamic Random Access Memory Semiconductors of One Megabit and Above from the Republic of Korea ("redetermination- LTFV") pursuant to Micron Technologies v. United States, 893 F. Supp. 21 (CIT 1995). 2. Although Samsung Semiconductor Co., Ltd. ("Samsung") was also a respondent in the original investigation, the Department determined that Samsung's weighted-average dumping rate during the period of investigation was de minimis, 0.22 percent. As a result, Samsung was excluded from the order. (See footnote 1,supra, especially 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) and the redetermination-LTFV.) 3. See Dynamic Random Access Memory Semiconductors of One Megabit and Above from the Republic of Korea; Final Results of Antidumping Duty Administrative Review, 61 FR 20216 (May 6, 1996), as amended, Dynamic Random Access Memory Semiconductors from the Republic of Korea; Amended Final Results of Antidumping Duty Administrative Review, 61 FR 51410 (October 2, 1996), as amended, Dynamic Random Access Memory Semiconductors from the Republic of Korea; Amended Final Results of Antidumping Duty Administrative Review, 62 FR 2654 (January 17, 1997) (see also March 31, 1999, Final Result of Redetermination Pursuant to Court Remand; Micron Technology, Inc. v. the United States and LG Semicon Co., LTD and Semicon America, Inc., Court No. 96-06-01529 Slip Op. 99-12 (January 28, 1999) and Final Result of Redetermination Pursuant to Court Remand; Micron Technology, Inc. v. the United States and LG Semicon Co., LTD and Semicon America, Inc., Court No. 96-06-01529 Slip Op. 99-51 (June 16, 1999)); Dynamic Random Access Memory Semiconductors of One Megabit and Above from the Republic of Korea; Final Results of Antidumping Duty Administrative Review, 62 FR 965 (January 7, 1997), as amended, Dynamic Random Access Memory Semiconductors from the Republic of Korea; Amended Final Results of Antidumping Duty Administrative Review, 62 FR 18742 (April 17, 1997) (see also Final Result of Redetermination Pursuant to Court Remand; Micron Technology, Inc. v. the United States and LG Semicon Co., LTD and Semicon America, Inc., Consol. Court No. 97-02-00205 Slip Op. 99-29 (March 25, 1999)); Dynamic Random Access Memory Semiconductors of One Megabit and Above from the Republic of Korea; Final Results of Antidumping Duty Administrative Review, 62 FR 39809 (July 24, 1997) (see also Final Results of Redetermination in the Third Administrative Review of the Antidumping Duty Order on Dynamic Random Access Memory Semiconductors of One Megabyte or Above from Korea Pursuant to Section 129 of the Uruguay Round Agreements Act (November 4, 1999) ("redetermination-3rd")); Dynamic Random Access Memory Semiconductors of One Megabit and 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 50867 (September 23, 1998), as amended, Notice of Amended Final Results of Antidumping Duty Administrative Review: Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea, 63 FR 56906 (October 23, 1998); and Dynamic Random Access Memory Semiconductors of One Megabit and 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). 4. See footnote 2, supra. 5. See Dynamic Random Access Memory Semiconductors of One Megabit and 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). 6. Although Samsung Austin Semiconductor, L.L.C. ("SAS") also filed a notice of intent to participate, it failed to submit a substantive response in a timely manner. Consequently, we determine that SAS is not participating in the instant review. 7. Hyundai also indicates that it has completed the process of acquiring LGS (another respondent in the original investigation) in October 1999. 8. On December 3, 1999, Micron requested an extension of the deadline for filing rebuttal comments. Pursuant to 19 CFR 351.302, the Department extended the deadline until December 14, 1999, for all participants who are eligible to file rebuttal comments. 9. See Extension of Time Limit for Preliminary Results of Five-Year Reviews, 65 FR 10048 (February 25, 2000). 10. See footnote 3, supra. After finding either zero or de minimis weighted-average dumping margins for Hyundai and LGS during the first three consecutive review periods (1992-1994, 1994-1995, and 1995-1996), for the next two review periods (1996-1997 and 1997-1998), the Department determined that Hyundai was dumping at rates 3.95 and 10.44 percent ad valorem, respectively and that LGS was dumping at rates 9.04 and 10.44 percent ad valorem, respectively. In the fourth (1996-1997) and fifth (1997-1998) administrative reviews, the Department also reviewed several resellers and found dumping margins for some of them: fourth review - Techgrow Limited (Hong Kong) - 9.28 percent ad valorem and Vitel Electronics Ottawa Office (Canada) - 9.28 percent ad valorem (Singapore Resources Pte. Ltd. (Singapore) and NIE Electronics Sdn. Bhd. (Malaysia) indicated that they did not make any shipment of the subject merchandise during the relevant review period); and fifth review - G5 Corporation - 10.44 percent ad valorem. 11. Hyundai contends that all available data and information prepared by industry experts and forecasters indicate that the DRAMs market has entered a period of upturn and will stay in an upturn for the foreseeable future. Hyundai relies on research either done by or published in Dataquest, Cahners In-Stat Group, DeDios & Associates, IC Insights, SIA, Merrill Lynch, and ABN AMRO. 12. A downturn is characterized by an excess of supply over demand; i.e., there is a downward pressure on the price during a downturn. In contrast, an upturn occurs when demand is greater than supply; i.e., the price tends to go up during a period of upturn. 13. But see footnote 3, supra (especially redetermination-3rd at 13). Contrary to Hyundai's contention, the Department did not explicitly acknowledge that Hyundai does not engage in dumping during an expanding (upturn) market. Instead, the Department only stated that Hyundai did not dump during the first three review periods, which the Department characterized as expanding market periods for DRAMs. 14. See footnote 3 and 13, supra. In its third administrative review as well as in its redetermination-3rd, the Department stipulated that the DRAMs industry is highly cyclical with periods of sharp upturn and downturn in market price. The Department further noted that the manufacturers/resellers of DRAMs are aggressive in their pricing during a downturn and more so during the trough of a downturn. Also, Hyundai alleges that the CEO of Micron acknowledged that Micron is selling chips at below cost during a downturn. (See Hyundai's substantive response, Exhibit 1.) 15. See footnote 11, supra. 16. E.g., although relying on an extensive study, Hyundai made an incorrect prediction in the third administrative review: Hyundai projected a strong DRAMs market in the future and made a claim that, accordingly, it would not dump. Micron alleges that, in reality, the DRAMs market turned for the worse, and Hyundai ended up dumping the subject merchandise at a higher rate than before. (See Micron's reply comment at 1-3.) 17. One example given by Micron is Hyundai's representation of a prospective increase of average selling price ("ASP"). Micron alleges that Hyundai is misleading when Hyundai characterizes a prospective increase of an aggregate ASP as equivalent to an increase in the price of each given density. In fact, an increase in an aggregate ASP is entirely possible even when the price of each density (e.g., 1, 4, 16, 64, 128 megabit, etc.) actually declines. This scenario is possible when there is a price differential between "inexpensive low density megabit chips" and "expensive higher density megabit chips" and when the consumption pattern of DRAMs dramatically shifts from low megabit chips to higher megabit chips. Micron further notes that, with respect to Dataquest's data, the shift from 16 megabit to 64 megabit density accounted entirely for the apparent increase in aggregate ASPs. 18. For example, Micron states that, unlike the rosy picture presented by Hyundai, Dataquest indicated that the current overcapacity will not resolve itself in the near term. 19. Micron claims that Hyundai actually increased its export of the subject merchandise to the United States after Hyundai's U.S. facility started its production of DRAMs. 20. See Procedures for Conducting Five-year ("Sunset") Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516, 13519 and 13524 (March 20, 1998). For initial transition orders, the revocation of an order or termination of a suspended investigation will be effective on January 1, 2000. 21. See Dynamic Random Access Memory Semiconductors of One Megabit and Above from Taiwan, Inv. No. 731-TA-811 (Final), USITC Pub. 3256 (December 1999) at 22-23. 22. See footnote 3 or 10, supra. 23. Like Hyundai, Samsung is also a large manufacturer of DRAMs. 24. See Micron's reply to Hyundai's substantive response at 8-29 (Micron illustrates many incorrect and/or overly optimistic predictions made by industry experts in the past), and at 29 (unlike Hyundai's claim, in the second half of 1999, a price increase was temporary; prices have continued their downward trend). 25. See Hyundai's substantive response at 58. 26. See footnote 10, supra. 27. Hyundai suggests that the Department should exclude LGS's margins because one of LGS's margins was based on facts otherwise available and, therefore, less predictive as a margin that is likely to prevail if the order is revoked. 28. But see footnote 20, supra. 29. See Dynamic Random Access Memory Semiconductors of One Megabit and 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). In the fifth administrative review, the Department indicated that because it cannot conclude an unaffiliated purchaser of the subject merchandise in the United States will ultimately pay the assessed duty, the Department found that antidumping duties had been absorbed by the producer or exporter during the period of review. See also footnote 30, infra. 30. Since duty absorption was found in the administrative review of a transition order, which was initiated in 1998, pursuant to section 351.213(j) of the Department's Regulation, we are obligated to take this duty-absorption findings into consideration in determining the likely-to- prevail dumping margins . 31. With respect to methodology, see Preliminary Results of Sunset Review: Porcelain-on-Steel Cooking Ware from Mexico, 64 FR 46651 (August 26, 1999), and Final Results of Expedited Sunset Review: Brass Sheet and Strip from Germany, 64 FR 49767 (September 14, 1999). 32. E.g., the Sunset Policy Bulletin stipulates that for companies that did not begin shipping until after the order was issued, the Department normally will provide the Commission a margin based on the all-others rate from the investigation.