(65 FR 12214, March 8, 2000)
                                                                A-583-827
                                                                NSR 10/97-9/98
                                                                Public Document

MEMORANDUM TO:	Robert S. LaRussa
                  Assistant Secretary
                   for Import Administration

FROM:             Richard W. Moreland
                  Deputy Assistant Secretary
                   for Import Administration

SUBJECT:          Issues and Decision Memorandum for the New Shipper Review
                  on Static Random Access Memory Semiconductors from Taiwan
                   October 1, 1997, through September 30, 1998

Summary

We have analyzed the comments of the interested parties in the 1997-1998 new
shipper review of the antidumping duty order covering static random access
memory semiconductors from Taiwan.  As a result of the acceptance of revised
cost data, we have made changes in the margin calculations as discussed in the
"Margin Calculations" section of this memorandum.  We also recommend that 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
new shipper review for which we received comments by parties:

1.  Facts Available
2.  Rejection of Post-Verification Cost Data
3.  Constructed Export Price Offset

Background

On October 12, 1999, the Department of Commerce (the Department) published the
preliminary results of the new shipper review of the antidumping duty order on
static random access memory semiconductors (SRAMs) from Taiwan.  See Static
Random Access Memory Semiconductors from Taiwan; Preliminary Results of
Antidumping Duty New Shipper Review, 64 FR 55251 (Oct. 12, 1999) (Preliminary
Results). The products covered by this order are synchronous, asynchronous, and
specialty SRAMs from Taiwan, whether assembled or unassembled.  The period of
review (POR) is October 1, 1997, through September 30, 1998.

We invited parties to comment on our preliminary results of review.  In
addition, in October 1999, we requested and received revised cost databases
from the sole respondent, GSI Semiconductor, Inc. (GSI Technology).  We have
used these databases and have changed the results from those presented in the
preliminary results of review.

Margin Calculations

At the time of the preliminary results, we found that the respondents cost
data was unuseable.  Accordingly, pursuant to section 776(a)(2)(B) of the
Tariff Act of 1930, as amended (the Act), we based the margin for all U.S.
sales for which either a difference in merchandise adjustment or constructed
value would be required on facts available.  For further discussion, see
Preliminary Results at 64 FR 55252.

As noted in the preliminary results, we afforded the respondent an opportunity
to submit revised cost databases which incorporated certain changes identified
at verification.  Because the company has done so, we have used this data for
purposes of the final results.  For further discussion, see Comment 1 and
Comment 2 in the "Discussion of Issues" section of this memorandum.
Consequently, we have revised our margin calculations as follows:

1.	Calculation of Constructed Value

In accordance with section 773(e) of the Act, we calculated constructed value
for each quarter of the POR, based on the sum of GSI Technologys cost of
materials, fabrication, selling, general and administrative expenses (SG&A),
and profit.  In accordance with section 773(e)(2)(A) of the Act, we based SG&A
on the amounts incurred and realized by GSI Technology in connection with the
production and sale of the foreign like product in the ordinary course of
trade, for consumption in the foreign country.  Regarding profit, we have based
the amount of profit on the one of the three alternative methods set forth in
section 773(e)(2)(B) of the Act.  Specifically, we calculated profit using the
financial statements of the respondents affiliated reseller in the home
market, in accordance with section 773(e)(2)(B)(3) of the Act, because: 1) we
do not have the actual profit for home market sales of the same general
category of merchandise as SRAMs (i.e., alternative one); and 2) there are no
other respondents in this segment of the proceeding from which to derive profit
data (i.e., alternative two).  Furthermore, in applying section 773(c)(2)(B)(3)
of the Act, we have not determined a "profit cap" due to the absence of data.
Therefore, we have used the affiliated resellers financial statements as the
facts available (see the Statement of Administrative Action accompanying the
Uruguay Round Agreements Act, H.R. Doc. 103-316, Vol. 1 (1994) (SAA) at 171).

2.	Margin Calculations

To determine whether sales of SRAMs from Taiwan were made in the United States
at less than normal value, we compared the constructed export price (CEP) to
normal value in the same quarter as the U.S. sale.  For those U.S. sales of
SRAMs for which there were no comparable home market sales in the ordinary
course of trade made in the same quarter, we compared CEP to the appropriate
quarterly constructed value, in accordance with section 773(a)(4) of the Act.

We calculated CEP and normal value using the same methodology stated in the
preliminary results, except as follows:

1.   We based testing expenses on the amounts reported in the revised cost
     databases;

2.   In accordance with section 772(f) of the Act, we calculated the CEP profit
     rate using the expenses incurred by GSI Technology and its affiliate on
their
     sales of the subject merchandise in the United States and the foreign like
     product in the home market and the profit associated with those sales; and

3.   Where appropriate, we made adjustments to normal value to account for
     differences in physical characteristics of the merchandise, in accordance
     with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

We made price-to-price comparisons using the same methodology stated in the
preliminary results.  Regarding price-to-constructed value comparisons, we
deducted home market credit expenses and testing expenses, pursuant to sections
773(a)(6)(C)(iii) and 773(a)(8) of the Act.  We also 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 constructed value by any home
market indirect selling expenses remaining after the deduction of the CEP
offset.

3.	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, in the following
instances:

1.    GSI Technology failed to report cost data in its revised cost submission
      for certain sales in its U.S. sales listing; and

2.    We found at verification that GSI Technology failed to report certain U.S.
      sales made during the POR.

For purposes of the final results, pursuant to section 776(a)(2)(B) of the
Act, we based the margin for these U.S. sales on facts available.  As facts
available, we have used the highest non-aberrant margin calculated for any U.S.
transaction, 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); Final
Determination of Sales at Less Than Fair Value; Stainless Steel Sheet and Strip
in Coils from Germany, 64 FR 30710, 30732 (June 8, 1999) (Sheet and Strip from
Germany); Notice of Final Determination of Sales at Less Than Fair Value:
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61747
(Nov. 19, 1997) (Carbon Steel Plate from South Africa); and Final Determination
of Sales at Less Than Fair Value: Certain Helical Spring Lock Washers From the
Peoples Republic of China, 58 FR 48833, 48839 (Sept. 20, 1993) (Helical Spring
Lock Washers From the PRC).  For further discussion, see Comment 1, below.

Discussion of the Issues

1.	Comment 1:  Facts Available

The petitioner argues that the Department should base the final margin for GSI
Technology on facts available.  According to the petitioner, throughout the
course of this review, the Department has found repeated inconsistencies and
errors in the submitted data.  The petitioner notes that the Department has
been required to issue numerous, lengthy supplemental questionnaires which have
resulted in substantially revised questionnaire responses.  Moreover, the
petitioner maintains that verification showed that these responses were neither
complete nor accurate.

According to the petitioner, the extent of the numerous errors, including a
significant volume of unreported U.S. sales, unreported discounts on U.S.
sales, and unsupported claims for adjustments to home market sales, requires
the application of facts available.  The petitioner asserts that GSI Technology
should not be able to obtain a more favorable result by failing to provide a
complete and accurate response than if it had cooperated fully.

Department's Position:

According to section 776(a) of the Act, the Department shall use the facts
otherwise available in reaching a determination if:

   1)   necessary information is not available on the record, or

   2)   an interested party or any other person 

        A)   withholds information that has been requested by the administering
             authority or the Commission under this title,

        B)   fails to provide such information by the deadlines for submission 
             of the information or in the form and manner requested, subject to 
             subsections (c)(1) and (e) of section 782,

        C)   significantly impedes a proceeding under this title, or

        D)   provides such information but the information cannot be verified 
             as provided in section 782(i).

In this proceeding, none of these requirements is met in toto.  Specifically,
with the exception of the instances identified in the "Margin Calculations"
section above, we find that all data necessary to perform our margin
calculations was on the record of this proceeding prior to the date of the
preliminary results.  Although GSI Technology provided revised cost databases
in October 1999 at our request, these new databases merely incorporated changes
identified during the cost verification which were clearly set forth in the
cost verification reports.

Moreover, we find that GSI Technology did not withhold information or fail to
provide its responses in a timely manner.  Indeed, throughout the course of
this review GSI Technology has demonstrated its willingness to cooperate with
the Departments requests for information, and it has attempted to answer each
request for information to the best of its ability.  Although its responses
contained certain inaccuracies and omissions, we were otherwise able to verify
the submitted information and are satisfied that complete and accurate
information exists on the record of this review (except as noted in the "Use of
Partial Facts Available" section, above).  Contrary to the implication by the
petitioner, we found no evidence of a pattern of misreporting of data nor any
indication that the respondent attempted to mislead the Department or impede
the proceeding.  For example, we note that GSI Technology over-reported certain
U.S. selling expenses (e.g., U.S. advertising and repacking), while it made
minor errors in other areas (e.g., it  misreported the date of shipment for one
U.S. sale and the date of payment for four others, etc.).

Nonetheless, regarding the unreported U.S. sales discovered at verification,
we agree with the petitioner that the margin for those sales should be based on
facts available because they were not reported to the Department in a timely
manner.  As facts available, we have used the highest non-aberrant margin
calculated for any U.S. transaction, in accordance with our practice.  See,
e.g., Sheet and Strip from Germany, 64 FR at 30732; Carbon Steel Plate from
South Africa, 62 FR 61747; and Helical Spring Lock Washers From the PRC, 58 FR
at 48839.  In selecting a facts available margin, we sought a margin that is
sufficiently adverse so as to effectuate the statutory purposes of the adverse
facts available rule, which is to induce respondents to provide the Department
with complete and accurate information in a timely manner.  We also sought a
margin that is indicative of GSI Technologys customary selling practices and
is rationally related to the transactions to which the adverse facts available
are being applied.  To that end, we selected the highest margin on an
individual sale in a commercial quantity that fell within the mainstream of GSI
Technologys transactions (i.e., transactions that reflect sales of products
that are representative of the broader range of models used to determine normal
value).  In selecting this margin, we did not consider margins found on sales
for which GSI Technology reported cost data affected by abnormally low yields,
because we do not consider these transactions to be representative.

2.	Comment 2:  Rejection of Post-Verification Cost Data

According to the petitioner, the Department should not accept the revised cost
databases submitted by GSI Technology because the respondent did not act to the
best of its ability in this review.  As support for this assertion, the
petitioner cites the concurrence memorandum issued for the preliminary results,
which states that GSI Technologys misallocation of rebates received from the
companys wafer supplier resulted from inadequate communication between the
U.S. office (which received the rebates) and the Taiwan branch (which prepared
the response).  The petitioner contends that this lack of communication
demonstrates that the respondent assigned preparation of the portion of the
response in question to personnel that did not have the required information at
hand, and that the preparers never communicated with the individuals who had
access to the necessary information.  Moreover, the petitioner maintains that
it is evident from the verification report that GSI Technology made no attempt
to match the rebates received to the products to which the rebates related.
Nonetheless, the petitioner argues that, in the event that the Department were
to accept the revisions to the cost database to reflect a revised allocation of
the rebates appearing in the cost verification report, it should not accept all
of GSI Technologys revisions.  Specifically, the petitioner asserts that GSI
Technology requested an adjustment for an additional rebate which it was unable
to substantiate at verification, and it notes that GSI Technology provided a
computer printout which purportedly supports this adjustment.  According to the
petitioner, the Departments verification procedures do not allow respondents
to self-verify the data that they submit, especially on the basis of hand-
written notations submitted six weeks after verification.

Department's Position:

As explained in response to Comment 1, above, we requested that GSI Technology
submit these revised cost databases, which merely incorporated changes
identified during verification.  We note that, as a new shipper, GSI Technology
has not participated in prior segments of this proceeding.  Moreover, not only
did it lack experience in preparing responses to antidumping questionnaires,
but it also had little experience tracking cost data in its own accounting
system.  Indeed, the company did not have a formal cost accounting system until
seven months after the beginning of the POR.  See the GSI Taiwan cost
verification report, dated August 26, 1999, at page 12.  Thus, contrary to the
petitioners assertions, inadequate communication between the two companies
provides no evidence of a deliberate attempt to mislead the Department.
Consequently, as noted above, we have accepted the revised databases for
purposes of the final results.

Regarding the additional rebate adjustment, however, we agree with the
petitioner.  GSI Technology was unable to support the amount of this rebate at
verification.  Specifically, the U.S. cost verification report at page 15
states the following:

Company officials stated that they had no record of this credit, and we
confirmed that it had not been entered into the general ledger.  Moreover, we
examined payment documentation for selected lots shown on the credit memo and
confirmed that GSI USA had paid for them in full.

Therefore, because we were unable to verify the accuracy of this adjustment,
we have denied it for purposes of the final results.

3.	Comment 3: Constructed Export Price Offset

The Department granted a CEP offset to GSI Technology for purposes of the
preliminary results.   According to the petitioner, the Department should deny
this offset for purposes of the final results because: 1) GSI Technology did
not request such an offset; and 2) the Departments analysis is contrary to law.

The petitioner notes that, in two recent decisions, the Court of International
Trade (CIT) has held that the Department must perform its level of trade (LOT)
analysis based on unadjusted starting prices for both U.S. and home market
sales.  See Borden, Inc. v. United States, 4 F. Supp. 2d 1221 (1998) (Borden);
and Micron Technology, Inc. v. United States, 40 F. Supp. 2d 481, 485-486
(1999) (Micron).  The petitioner contends that the Departments analysis is
contrary to these rulings because the Department conducted its analysis based
on the level of the constructed sale from the exporter to the importer (i.e.,
after adjustment for U.S. indirect selling expenses).  According to the
petitioner, when the Department conducts a corrected LOT analysis, it will find
that the comparison market sales made by GSI Technology were not made at a more
advanced LOT than its sales in the United States, and, therefore, there is no
basis for granting a CEP offset.

Department's Position:

We recognize that the CIT has held that the Departments practice of
determining LOTs for CEP transactions after CEP deductions is an impermissible
interpretation of section 772(d) of the Act.  See Borden, 4 F. Supp. 2d at 1241-
1242.  The Department believes, however, that its practice is in full
compliance with the statute.  On June 4, 1999, the CIT entered a final
judgement in Borden on the LOT issue.  See Borden, Inc., v. United States,
Court No. 96-08-01970, Slip Op. 99-50 (CIT June 4, 1999).  The government has
filed an appeal of Borden which is pending before the U.S. Court of Appeals for
the Federal Circuit.  Consequently, the Department has continued to follow its
normal practice of adjusting CEP under section 772(d) of the Act prior to
starting a LOT analysis, as articulated in the Departments regulations at
section 351.412.

The Department has consistently stated that the Act and the SAA support
analyzing the level of trade of CEP sales at the constructed level, after
expenses associated with economic activities occurring in the United States
have been deducted pursuant to section 772(d) of the Act.  In the preamble to
our proposed regulations, we stated:

With respect to the identification of levels of trade, some commentators
argued that, consistent with past practice, the Department should base level of
trade on the starting price for both export price EP and CEP sales...  The
Department believes that this proposal is not supported by the SAA.  If the
starting price is used for all U.S. sales, the Departments ability to make
meaningful comparisons at the same level of trade (or appropriate adjustments
for differences in levels of trade) would be severely undermined in cases
involving CEP sales.  As noted by other commentators, using the starting price
to determine the level of trade of both types of U.S. sales would result in a
finding of different levels of trade for an EP sale and a CEP sale adjusted to
a price that reflected the same selling functions.  Accordingly, the
regulations specify that the level of trade analyzed for EP sales is that of
the starting price, and for CEP sales it is the constructed level of trade of
the price after the deduction of U.S. selling expenses and profit.

See Antidumping Duties; Countervailing Duties; Notice of Proposed Rule Making
and Request for Public Comments, 61 FR 7308, 7347 (Feb. 27, 1996).

Consistent with the above position, in those cases where a level of trade
comparison is warranted and possible, the Department evaluates the level of
trade for CEP sales based on the price after adjustments are made under section
772(d) of the Act.  See, e.g., Large Newspaper Printing Presses and Components
Thereof, Whether Assembled of Unassembled, From Japan: Notice of Final
Determination of Sales at Less Than Fair Value, 61 FR 38139, 38143 (July 23,
1996).  We note that, in every case decided under the revised antidumping
statute, we have consistently adhered to this interpretation of the SAA and of
the Act.  See, e.g., Extruded Rubber Thread From Malaysia; Final Results of
Antidumping Duty Administrative Review, 65 FR 6140, 6141 (Feb. 8, 2000); Notice
of Final Determination of Sales at Less Than Fair Value: Dynamic Random Access
Memory Semiconductors of One Megabit and Above ("DRAMs") from Taiwan, 64 FR
56308, 56313 (Oct. 19, 1999); Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof from France, Germany, Italy, Japan, Singapore, and
the United Kingdom; Final Results of Antidumping Duty Administrative Reviews,
62 FR 2081, 2106 (Jan. 15, 1997); and Aramid Fiber Formed of Poly Para-
Phenylene Terephthalamide from the Netherlands; Final Results of Antidumping
Administrative Review, 61 FR 51406, 51408 (Oct. 2, 1996).

In this case, in accordance with the above precedent, our instructions in the
questionnaire issued to GSI Technology stated that the constructed level of
trade should be used.  We verified the differences in selling functions in the
home and in the U.S. markets, after all selling expenses incurred in the United
States were deducted from the CEP.  Specifically, we found that all of the
selling functions related to all U.S. and certain home market sales occurred in
the United States, as did a number of the selling functions related to the
remaining home market sales.  See the GSI USA sales verification report, dated
September 29, 1999, at pages 28 and 31.

As stated in the SAA, a constructed export price offset adjustment will be
made only where: 1) the data available do not form an appropriate basis for
determining an LOT adjustment under section 773(a)(7)(A)(ii) of the Act; and 2)
normal value is established at a level of trade more remote from the factory
than the level of trade of the CEP.  Because we find that only one level of
trade existed in the home market during the POR, we are unable to make an LOT
adjustment under section 773(a)(7)(A)(ii) of the Act.  See Preliminary Results
at 64 FR 55252.  Moreover, because normal value is based on a price which
reflects full selling activities, while the CEP after adjustment is based on a
price which reflects none, we find that the normal value is at a level of trade
more remote from the factory than the level of trade of the CEP.  Accordingly,
we find that the Departments decision to grant a CEP offset to GSI Technology
is consistent with the statute and the Departments practice and is supported
by substantial evidence on the record.  Indeed, to deny a CEP offset under
these factual circumstances would result in comparisons which are not
meaningful. Consequently, consistent with our preliminary results, we have
continued to analyze the level of trade based on adjusted CEP prices, rather
than the starting CEP prices, and we have continued to grant a CEP offset to
GSI Technology.

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
the final results of review and the final weighted-average dumping margin for
the reviewed firm in the Federal Register.

Agree____					Disagree____

Joseph A. Spetrini
Acting Assistant Secretary for
  Import Administration

                 (Date)