Daily Rules, Proposed Rules, and Notices of the Federal Government
On August 11, 2003, the Department of Commerce (“the Department”) published a countervailing duty order on dynamic random access memory semiconductors (“DRAMS”) from the Republic of Korea (“ROK”).
On December 12, 2008, we issued countervailing duty questionnaires to the Government of the Republic of Korea (“GOK”) and Hynix. We received responses to these questionnaires on January 29, 2009. On March 17, 2009, we issued supplemental questionnaires to the GOK and Hynix. We received timely responses to these supplemental questionnaires on April 14, 2009. We issued additional supplemental questionnaires to the GOK and Hynix on July 10, 2009 and received responses on July 23, 2009 and July 17, 2009, respectively.
We received new subsidy allegations from Micron on February 17, 2009.
On April 14, 2009, we published a postponement of the preliminary results in this review until August 3, 2009.
The products covered by the order are DRAMS from the ROK, whether assembled or unassembled. Assembled DRAMS include all package types. Unassembled DRAMS include processed wafers, uncut die, and cut die. Processed wafers fabricated in the ROK, but assembled into finished semiconductors outside the ROK are also included in the scope. Processed wafers fabricated outside the ROK and assembled into finished semiconductors in the ROK are not included in the scope.
The scope of the order additionally includes memory modules containing DRAMS from the ROK. A memory module is a collection of DRAMS, the sole function of which is memory. Memory modules include single in-line processing modules, single in-line memory modules, dual in-line memory modules, small outline dual in-line memory modules, Rambus in-line memory modules, and memory cards or other collections of DRAMS, whether unmounted or mounted on a circuit board. Modules that contain other parts that are needed to support the function of memory are covered. Only those modules that contain additional items which alter the function of the module to something other than memory, such as video graphics adapter boards and cards, are not included in the scope. The order also covers future DRAMS module types.
The scope of the order additionally includes, but is not limited to, video random access memory and synchronous graphics random access memory, as well as various types of DRAMS, including fast page-mode, extended data-out, burst extended data-out, synchronous dynamic RAM, Rambus DRAM, and Double Data Rate DRAM. The scope also includes any future density, packaging, or assembling of DRAMS. Also included in the scope of the order are removable memory modules placed on motherboards, with or without a central processing unit, unless the importer of the motherboards certifies with U.S. Customs and Border Protection (“CBP”) that neither it, nor a party related to it or under contract to it, will remove the modules from the motherboards after importation. The scope of the order does not include DRAMS or memory modules that are re-imported for repair or replacement.
The DRAMS subject to the order are currently classifiable under subheadings 8542.21.8005, 8542.21.8020 through 8542.21.8030, and 8542.32.0001 through 8542.32.0023 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The memory modules containing DRAMS from the ROK, described above, are currently classifiable under subheadings 8473.30.1040, 8473.30.1080, 8473.30.1140, and 8473.30.1180 of the HTSUS. Removable memory modules placed on motherboards are classifiable under subheadings 8443.99.2500, 8443.99.2550, 8471.50.0085, 8471.50.0150, 8517.30.5000, 8517.50.1000, 8517.50.5000, 8517.50.9000, 8517.61.0000, 8517.62.0010, 8517.62.0050, 8517.69.0000, 8517.70.0000, 8517.90.3400, 8517.90.3600, 8517.90.3800, 8517.90.4400, 8542.21.8005, 8542.21.8020, 8542.21.8021, 8542.21.8022, 8542.21.8023, 8542.21.8024, 8542.21.8025, 8542.21.8026, 8542.21.8027, 8542.21.8028, 8542.21.8029, 8542.21.8030, 8542.31.0000, 8542.33.0000, 8542.39.0000, 8543.89.9300, and 8543.89.9600 of the HTSUS. However, the product description, and not the HTSUS classification, is dispositive of whether merchandise imported into the United States falls within the scope.
On December 29, 2004, the Department received a request from Cisco Systems, Inc. (“Cisco”), to determine whether removable memory modules placed on motherboards that are imported for repair or refurbishment are within the scope of the order.
The period for which we are measuring subsidies,
Effective June 30, 2003, the Department adopted a new methodology for analyzing privatizations in the countervailing duty context.
Pursuant to 19 CFR 351.524(b), non-recurring subsidies are allocated over a period corresponding to the AUL of the renewable physical assets used to produce the subject merchandise. Section 351.524(d)(2) of the Department's regulations creates a rebuttable presumption that the AUL will be taken from the U.S. Internal Revenue Service's 1977 Class Life Asset Depreciation Range System (the “IRS Tables”). For DRAMS, the IRS Tables prescribe an AUL of five years. During this review, none of the interested parties disputed this
allocation period. Therefore, we continue to allocate non-recurring benefits over the five-year AUL.
For loans that we found countervailable in the investigation or in the prior administrative reviews, and which continued to be outstanding during the POR, we have used the benchmarks from the prior administrative reviews.
For long-term, won-denominated loans originating in 1986 through 1995, we used the average interest rate for three-year corporate bonds as reported
Hynix's corporate bonds for 2000-2003 for any calculations because Hynix either did not obtain bonds or obtained bonds through countervailable debt restructurings during those years.
For U.S. dollar-denominated loans, we relied on the lending rates as reported in the IMF's
For the years in which we previously determined Hynix to be uncreditworthy (2000 through 2003), we used the formula described in 19 CFR 351.505(a)(3)(iii) to determine the benchmark interest rate. For the probability of default by an uncreditworthy company, we used the average cumulative default rates reported for the Caa- to C- rated category of companies as published in Moody's Investors Service, “Historical Default Rates of Corporate Bond Issuers, 1920-1997” (February 1998). For the probability of default by a creditworthy company, we used the cumulative default rates for investment grade bonds as published in Moody's Investors Service: “Statistical Tables of Default Rates and Recovery Rates” (February 1998). For the commercial interest rates charged to creditworthy borrowers, we used the rates for won-denominated corporate bonds as reported by the BOK and the U.S. dollar lending rates published by the IMF for each year.
For countervailable long-term foreign-currency denominated loans reported by Hynix, we used, where available, the company-specific, weighted-average interest rates on the company's comparable commercial foreign currency loans from foreign bank branches in the ROK, foreign securities, and direct foreign loans outstanding during the POR. For countervailable variable-rate loans outstanding during the POR, pursuant to 19 CFR 351.505(a)(5)(i), we used the interest rates of variable-rate lending instruments issued during the year in which the government loans were issued. Where such loans were unavailable, the Department, consistent with 19 CFR 351.505(a)(3)(ii), followed its prior practice and relied upon lending rates as reported in the
We examined the following programs determined to confer subsidies in the investigation
and prior administrative reviews and preliminarily find that Hynix continued to receive benefits under these programs during the POR.
In the investigation, the Department determined that the GOK entrusted or directed creditor banks to participate in financial restructuring programs, and to provide credit and other funds to Hynix, in order to assist Hynix through its financial difficulties. The financial assistance provided to Hynix by its creditors took various forms, including new loans, convertible and other bonds, extensions of maturities and interest rate reductions on existing debt (which we treated as new loans), Documents Against Acceptance (“D/A”) financing, usance financing, overdraft lines of credit, debt forgiveness, and DES. The Department determined that these were financial contributions that constituted countervailable subsidies during the period of investigation.
In prior administrative reviews, the Department also found that the GOK continued to entrust or direct Hynix's creditors to provide financial assistance to Hynix throughout 2002 and 2003. The financial assistance provided to Hynix during this period included the December 2002 DES and the extensions of maturities and/or interest rate deductions on existing debt.
In an administrative review, we do not revisit past findings unless new factual information or evidence of changed circumstances has been placed on the record of the proceeding that would compel us to reconsider those findings.
Micron argues in its New Subsidy Allegations submission that the Department should reconsider its decision on the timing of the 2002 DES and find that the DES occurred in 2003. As noted above, we stated that the issue was not a new subsidy allegation, but rather a subsidy valuation issue, and we would not consider reexamining the issue absent new information that casts substantial doubt on this finding.
In its argument, Micron provides new information
In submitting the “new information,” Micron does not contest this premise, but highlights the fact that three members of the BOD remained after its unanimous rejection of the Micron deal in April 2002 and, Micron argues, therefore, that the BOD vote on the restructuring in January 2003 was not
As the benefit from the 2002 DES was fully allocated in the prior administrative review and we are not reexamining our prior decision, we are only including in our benefit calculation the following financial contributions countervailed in the investigation and prior administrative reviews: bonds, debt forgiveness, and long-term debt outstanding during the POR. In calculating the benefit, we have followed the same methodology used in prior administrative reviews.
For loans, we have followed the methodology described at 19 CFR 351.505(c) using the benchmarks described in the “Discount Rates and Benchmarks for Loans” section above.
We divided the total benefits allocated to the POR from the various financial contributions by Hynix's POR sales. On this basis, we preliminarily determine the countervailable subsidy from this program to be less than 0.005 percent
Implemented under the Framework on Science and Technology Act, the Operation G-7/HAN Program (“G-7/HAN Program”) operated from 1992 through 2001. The purpose of this program was to raise the GOK's technology standards to the level of the G-7 countries. The Department found that the G7/HAN Program ended in 2001.
We found that the G-7/HAN Program provided countervailable subsidies in the investigation. No interested party provided new evidence that would lead us to reconsider our earlier finding. Therefore, we continue to find that these loans confer a countervailable subsidy.
To calculate the benefit of these loans during the POR, we compared the interest actually paid on the loans during the POR to what Hynix would have paid under the benchmark described in the “Subsidy Valuation Information” section of this notice. Next, we divided the total benefit by Hynix's total sales of subject merchandise for the POR to calculate the countervailable subsidy. On this basis, we preliminarily determine the countervailable subsidy to be 0.01 percent
The 21st Century Frontier RD Program (“21st Century Program”) was established in 1999 with a structure and governing regulatory framework similar to those of the G-7/HAN Program, and for a similar purpose,
Hynix reported that it had loans from the 21st Century Program outstanding during the POR.
In the investigation, we determined that this program conferred a
To calculate the benefit of these loans during the POR, we compared the interest actually paid on the loans during the POR to what Hynix would have paid under the benchmark described in the “Discount Rates and Benchmarks for Loans” section above. We then divided the total benefit by Hynix's total sales in the POR to calculate the countervailable subsidy rate. On this basis, we preliminarily find countervailable benefits of less than 0.005 percent ad valorem during the POR. Therefore, consistent with our past practice, we did not include this program in our preliminary net countervailing duty rate.
Article 95(1).4 of the Korean Customs Act provides for import duty reductions on imports of “machines, instruments and facilities (including the constituent machines and tools) and key parts designated by the Ordinance of the Ministry of Finance and Economy for a factory automatization applying machines, electronics or data processing techniques.”
Hynix reported that it had received duty reductions under this program during the POR.
In a prior administrative review, the Department found that the above program provided a financial contribution in the form of revenue forgone and a benefit in the amount of the duty savings.
To calculate the benefit, we divided the total duty savings Hynix received during the POR by Hynix's total sales during the POR. On this basis, we preliminarily determine the countervailable subsidy to be 0.01
In the fourth administrative review the Department did not make a finding on the countervailability of this program and said it would examine this program in a subsequent administrative review.
As outlined in Article 18, paragraph 1, subparagraph 4 of the Import-Export Bank of Korea (“KEXIM”) Act, the “Import Financing Program” is provided to Korean importers to facilitate their purchase of essential materials, major resources, and operating equipment, the stable and timely supply of which is essential to the stability of the general economy. The equipment and materials eligible to be imported under the program fall under 13 headings listed in Article 14 of the KEXIM Business Manual. The listed items range from raw materials to factory automation equipment and include products and materials described in government notices.
Further, according to the GOK, any Korean company is eligible for the “Import Financing Program” as long as the equipment or material appears under the 13 headings of eligible items, the company can satisfy the financial criteria laid out in “KEXIM's Credit Extension Regulation,” and KEXIM's Credit Extension Committee approves the financing application. Regarding the last item, the GOK stated that all decisions to offer this financing are based on the application and financial status of the applicant company.
Hynix received loans from KEXIM under this program in 2006 and 2007.
We preliminarily determine that loans under this program constitute financial contributions, pursuant to sections 771(5)(B)(i) and 771(5)(D)(i) of the Act, and also provide benefits equal to the difference between what Hynix paid on its loans and the amount it would have paid on comparable commercials loans within the meaning of section 771(5)(E)(ii) of the Act.
Regarding specificity, information submitted by the GOK shows that loans provided under the program are available to any enterprise that meets the criteria as described above.
In determining whether this program is
To calculate the benefit under this program, we used the benchmarks described in the “Discount Rates and Benchmarks for Loans"section above, as well as the methodology described in 19 CFR 351.505(c). On this basis, we preliminarily determine that Hynix received a countervailable subsidy of 0.04 percent
KEXIM provides short-term export financing to small-, medium- and large-sized companies (not including companies included in the largest five conglomerates in the ROK, unless the company's headquarters is located outside the Seoul Metropolitan area). The loans are not tied to particular export transactions. However, a company, along with the financing application, must provide its export performance periodically for review by KEXIM. Further, any loan agreement
Hynix received a loan under this program during the POR and provided documentation (
We preliminarily determine that the following programs were not used during the POR:
In the first administrative review, the Department found that “any benefits provided to Hynix under the System IC 2010 Project are tied to non-subject merchandise” and, therefore, that “Hynix did not receive any countervailable benefits under this program during the POR,” in accordance with 19 CFR 351.525(b)(5).
In accordance with 19 CFR 351.221(b)(4)(i), we calculated an individual subsidy rate for Hynix, the producer/exporter covered by this administrative review. We preliminarily determine that the total estimated net countervailable subsidy rate for Hynix for calendar year 2007 is 0.06 percent
On October 3, 2008, the Department published a
Interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed not later than five days after the date of filing the case briefs. Parties who submit briefs in this proceeding should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f).
Interested parties may request a hearing within 30 days after the date of publication of this notice. Unless otherwise specified, the hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs.
The Department will publish a notice of the final results of this administrative review within 120 days from the publication of these preliminary results.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.