Static Random Access Memory Semiconductors From Taiwan; Preliminary Results of Antidumping Duty New Shipper Review

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act. In addition, unless otherwise indicated, all citations to the Department of Commerce regulations are to 19 CFR Part 351 (1998).

Background

On October 15, 1998, GSI Technology requested that the Department of Commerce (the Department) conduct a new shipper review pursuant to section 751(a)(2)(B) of the Act and 19 CFR 351.214(b). In this request, GSI Technology certified that it did not export the subject merchandise to the United States during the period covered by the original less- than-fair-value (LTFV) investigation (the ``POI''), and that it is not affiliated with any company which exported subject merchandise to the United States during the POI. Pursuant to 19 CFR 351.214(b)(2)(iv), GSI Technology submitted documentation establishing the date on which it first entered subject merchandise for consumption into the United States, the volume of that shipment, and the date of the first sale to an unaffiliated customer in the United States. Based on the above information, the Department initiated a new shipper review covering GSI Technology (see Static Random Access Memory Semiconductors from Taiwan: Initiation of New Shipper Antidumping Duty Administrative Review, 63 FR 67456 (Dec. 7, 1998)). The Department is now conducting this review in accordance with section 751 of the Act and 19 CFR 351.214. On December 8, 1998, we issued our questionnaire to GSI Technology. We received a response to this questionnaire in January 1999. In February and April 1999, we issued supplemental questionnaires to GSI Technology. We received responses to these questionnaires in March and May 1999, respectively. On May 24, 1999, the Department published in the Federal Register a notice of postponement of the preliminary results until no later than October 4, 1999 (64 FR 27966). In June 1999, we issued an additional supplemental questionnaire to GSI Technology. We received a response to this questionnaire in July 1999. In July, August, and September 1999, the Department conducted verification of the data submitted by GSI Technology, in accordance with section 782(i) of the Act and 19 CFR 351.307(b)(1)(iv). Also in September 1999, the Department requested that GSI Technology submit a revised cost database incorporating the verification findings.

Scope of the Review

The products covered by this review are synchronous, asynchronous, and specialty SRAMs from Taiwan, whether assembled or unassembled. Assembled SRAMs include all package types. Unassembled SRAMs include processed wafers or die, uncut die and cut die. Processed wafers produced in Taiwan, but packaged, or assembled into memory modules, in a third country, are included in the scope; processed wafers produced in a third country and assembled or packaged in Taiwan are not included in the scope. The scope of this review includes modules containing SRAMs. Such modules include single in-line processing modules, single in-line memory modules, dual in-line memory modules, memory cards, or other collections of SRAMs, whether unmounted or mounted on a circuit

board. The scope of this review does not include SRAMs that are physically integrated with other components of a motherboard in such a manner as to constitute one inseparable amalgam (i.e., SRAMs soldered onto motherboards). The SRAMs within the scope of this review are currently classifiable under the subheadings 8542.13.8037 through 8542.13.8049, 8473.30.10 through 8473.30.90, and 8542.13.8005 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this review is dispositive.

Period of Review

The period of review (POR) is October 1, 1997, through September 30, 1998.

Use of Partial Facts Available

We determine that the use of partial facts available is appropriate for GSI Technology, in accordance with section 776(a) of the Act. At verification, we discovered that the respondent had mis-allocated certain rebates received from one of its subcontractors during the POR when calculating its difference-in-merchandise (difmer) and constructed value (CV) data. Because we find that this mistake caused a significant distortion in the reported costs, we determine that GSI Technology's cost data is unreliable for use in the preliminary results. Moreover, although the correct data exists on the record of this proceeding, we are unable to use this data at this time in our preliminary results due to the short time between the end of verification and the date of the preliminary results. However, we have requested that the respondent provide a new cost database which incorporates our verification findings, and we may consider this data for purposes of the final results. Because we find that the respondent's cost data is unuseable in its current form, for purposes of the preliminary results we have, pursuant to section 776(a)(2)(B) of the Act, based the margin for all U.S. sales for which either a difmer adjustment or CV would be required on facts available. As facts available, we have used a non-aberrant margin calculated for identical price-to-price comparisons, in accordance with our practice. See Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909, 8912 (Feb. 23, 1998). Finally, we found at verification that GSI Technology failed to report certain U.S. sales during the POR. Accordingly, we have also based the margin for these sales on facts available. As facts available, we have used the same margin noted above.

Level of Trade and Constructed Export Price Offset

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine normal value (NV) based on sales in the comparison market at the same level of trade as export price (EP) or constructed export price (CEP). The NV level of trade is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general and administrative expenses (SG&A) and profit. For EP, the U.S. level of trade is also the level of the starting-price sale, which is usually from the exporter to the unaffiliated U.S. customer. 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 level of trade than EP or CEP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different level of trade 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 level of trade of the export transaction, we make a level-of-trade 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 (Nov. 19, 1997). GSI Technology claimed that it made home market sales at two levels of trade, which it defined as follows: 1) original equipment manufacturers (OEMs) who purchased directly from GSI Technology; and 2) OEMs who purchased through the affiliated sales representative. We examined the selling activities at each reported marketing stage and found that there was no substantive difference in the selling functions performed at any of these stages. Consequently, we determine that only one level of trade exists with respect to sales made by GSI Technology to all home market customers. For a detailed explanation of this analysis, see the memorandum entitled ``Preliminary Results of Antidumping Duty New Shipper Review on Static Random Access Memory Semiconductors from Taiwan,'' dated October 4, 1999 (the ``concurrence memorandum''). Because we have found that only one level of trade existed in the home market during the POR, we conducted an analysis to determine whether a CEP offset was warranted. In order to determine whether NV was established at a level of trade which constituted a more advanced stage of distribution than the level of trade of the CEP, we compared the selling functions performed for home market sales with those performed with respect to the CEP transaction, which excludes economic activities occurring in the United States, pursuant to section 772(d) of the Act. We found that GSI Technology performed most of the selling functions and services related to U.S. sales at its sales offices in the United States, and, therefore, that these selling functions are associated with those expenses which we deduct from the CEP starting price, as specified in section 772(d) of the Act. Regarding home market sales, GSI Technology performed largely the same selling functions for these sales as were performed for U.S. sales. Therefore, its sales in Taiwan were at a more advanced stage of marketing and distribution (i.e., more remote from the factory) than the constructed U.S. level of trade, which represents an ex-factory price after the deduction of expenses associated with U.S. selling activities. However, because GSI Technology sells at only one home market level of trade, the difference in the levels of trade cannot be quantified. Because the difference in the levels of trade cannot be quantified, but the home market is at a more advanced level of trade, we have granted a CEP offset to GSI Technology. For further discussion, see the concurrence memorandum noted above.

Comparisons to Normal Value

To determine whether sales of SRAMs from Taiwan were made in the United States at less than NV, we compared the CEP to NV. We were unable to make price-to-price comparisons involving non-identical products because GSI Technology did not provide useable difmer data. Moreover, we were unable to make price-to-CV comparisons because GSI Technology similarly did not provide usable CV data. Therefore, we based the margin for all U.S. sales with no corresponding identical home market match on facts available. As facts available, we used a non-aberrant

margin calculated for identical comparisons. See the ``Use of Partial Facts Available'' section of this notice for further discussion.

Constructed Export Price

In accordance with section 772(b) of the Act, we used CEP methodology because all sales took place after importation into the United States. We revised the reported data based on our findings at verification. We based CEP on packed, delivered prices to the first unaffiliated customer in the United States. We made deductions from CEP for discounts, as appropriate. We also made deductions for foreign inland freight, international freight, U.S. customs duties and customs user fees, U.S. inland freight, and U.S. warehousing expenses, where appropriate, in accordance with section 772(c)(2)(A) of the Act. We made additional deductions from CEP, where appropriate, for credit expenses, advertising expenses, commissions, testing expenses, indirect selling expenses, inventory carrying costs, U.S. repacking expenses, and U.S. further manufacturing costs, in accordance with section 772(d) of the Act. Regarding credit expenses, we found that GSI Technology had not received payment for certain sales as of the date of verification. Consequently, we used the last day of GSI Technology's U.S. sales verification as the date of payment for any unpaid amount and recalculated credit expenses accordingly. Regarding testing expenses, we found that GSI Technology had not reported these expenses for certain products during the POR. Accordingly, we based the testing expenses for these products on facts available. As facts available, we used the highest testing expenses reported for any other product produced in the same quarter. Pursuant to section 772(d)(3) of the Act, we further reduced the starting price by an amount for profit, to arrive at CEP. As noted in the ``Use of Partial Facts Available'' section above, we have determined that GSI Technology's cost data is unusable at this time, based on our findings at verification. Consequently, we are unable to use this data for purposes of determining the CEP profit rate, in accordance with section 772(f) of the Act. Rather, as facts available, we have derived a CEP profit rate using the data shown on GSI Technology's consolidated financial statements for the fiscal year ended March 31, 1998.

Normal Value

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is five percent or more of the aggregate volume of U.S. sales), we compared the volume of GSI Technology's home market sales of the foreign like product to the volume of U.S. sales of subject merchandise, in accordance with section 773(a)(1)(C) of the Act. Based on this comparison, we determined that GSI Technology had a viable home market during the POR. Consequently, we based NV on home market sales. GSI Technology made sales of SRAMs to an affiliated party in the home market during the POR. However, because GSI Technology sold different models to affiliated and unaffiliated parties, we were unable to test these sales to ensure that, on average, they were made at ``arm's-length'' prices, in accordance with 19 CFR 351.403(c). (See letter from James Maeder to H.W. Chen, dated February 16, 1999.) Accordingly, we did not include in our analysis any sales made to the affiliated party because we were unable to determine that they were at ``arm's-length.'' Pursuant to 19 CFR 351.403(d), we based our analysis on the downstream sales of the affiliate to its unaffiliated customers. For price-to-price comparisons, we based NV on ex-warehouse or delivered prices to home market customers. Where appropriate, we deducted home market movement charges, including foreign inland freight and off-site warehousing expenses, in accordance with section 773(a)(6)(B) of the Act. We also deducted home market credit expenses and testing expenses, pursuant to section 773(a)(6)(C)(iii) of the Act. We disallowed a claim made for foreign exchange losses associated with sales to the affiliated distributor. We also disallowed a claim made for home market customs fees because GSI Technology was unable to demonstrate at verification that these expenses related to home market sales. For further discussion, see the concurrence memorandum. We deducted home market indirect selling expenses, including inventory carrying costs and other indirect selling expenses, up to the amount of indirect selling expenses incurred on U.S. sales, in accordance with section 773(a)(7)(B) of the Act. Where applicable, in accordance with 19 CFR 351.410(e), we offset any commission paid on a U.S. sale by reducing the NV by any home market indirect selling expenses remaining after the deduction for the CEP offset, up to the amount of the U.S. commission.

Currency Conversion

Generally, we make currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank. However, section 773A of the Act directs the Department to use a daily exchange rate in order to convert foreign currencies into U.S. dollars unless the daily rate involves a fluctuation. It is the Department's practice to find that a fluctuation exists when the daily exchange rate differs from the benchmark rate by 2.25 percent. The benchmark is defined as the moving average of rates for the past 40 business days. When we determine a fluctuation to have existed, we substitute the benchmark for the daily rate, in accordance with established practice.

Preliminary Results of the Review

We preliminarily determine that the following margin exists for GSI Technology during the period October 1, 1997, through September 30, 1998:

------------------------------------------------------------------------ Margin Manufacturer/producer/exporter percentage ------------------------------------------------------------------------ GSI Technology............................................. 18.71 ------------------------------------------------------------------------

The Department will disclose to parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice. Interested parties may request a hearing within 30 days of publication. Any hearing, if requested, will be held two days after the date rebuttal briefs are filed. Interested parties may submit case briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice. The Department will issue the final results of this new shipper review, including the results of its analysis of issues raised in any such written comments, within 90 days of the issuance of these preliminary results. Upon completion of the new shipper review, the Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), we have calculated importer-specific assessment rates based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of that importer's entries of

subject merchandise during the POR. Pursuant to 19 CFR 351.106(c)(2), we will instruct the Customs Service to liquidate without regard to antidumping duties any entries for which the assessment rate is de minimis (i.e., less than 0.50 percent). The assessment rate will be assessed uniformly on all entries of that particular importer made during the POR. The Department will issue appraisement instructions directly to the Customs Service. Further, the following deposit requirements will be effective for all shipments of SRAMs from Taiwan entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this new shipper review, as provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit rates for the reviewed company will be the rate established in the final results of this review; (2) for previously investigated companies, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, or the LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 41.75 percent, the all others rate established in the LTFV investigation. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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 new shipper review and notice are in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.

Dated: October 4, 1999. Robert S. LaRussa, Assistant Secretary for Import Administration. [FR Doc. 99-26590 Filed 10-8-99; 8:45 am] BILLING CODE 3510-DS-P