Opinion ID: 211643
Heading Depth: 3
Heading Rank: 2

Heading: Product-Specific R&D Expenses

Text: 19 We turn next to that part of the court's judgment requiring Commerce to use Hynix's verified, product-specific R&D costs. In the Final Results, Commerce rejected Hynix's product-specific R&D costs in favor of a method that allocated all semiconductor R&D expenses over the total number of semiconductors sold. Commerce claimed that this approach more accurately captures R&D expenses attributable to the subject merchandise because, according to the theory of cross-fertilization, other semiconductor R&D benefits DRAMs. Commerce was able to offer only two pieces of support for this assertion. First, it relied on the expertise of Dr. Murzy Jhabvala, a semiconductor engineer, who conducted a study showing that R&D for one type of semiconductor influenced the development of SRAMs. Dr. Jhabvala extrapolated from this study, without assessing Hynix's operations specifically, that all of Hynix's semiconductor research benefits DRAMs. Second, aside from this theoretical assessment of Hynix's R&D environment, Commerce relied on Exhibit 20 of the Department's verification report, which listed R&D projects in Hynix's non-memory labs. 10 The list contained names that appeared to indicate that Hynix's non-memory labs were being used for memory research, even research on DRAMs specifically. Hynix, on the other hand, argues that Commerce must accept its verified, product-specific R&D costs pursuant to section 1677b(f), and, further, that section 1677b(e)(2)(A) 11 requires Commerce to use actual values, such as those provided by Hynix, when available. 20 This precise issue was presented to the court in a prior review of the same merchandise. In Micron Technology, Inc. v. United States, 893 F.Supp. 21, 27 (Ct. Int'l Trade 1995), aff'd, 117 F.3d 1386 (Fed.Cir.1997), the court required Commerce to accept the product-specific R&D expenses reported by Hynix. In so doing, it noted that the validity of Commerce's methodology cannot rest on intuitive appeal alone; rather, the factual premise upon which Commerce bases its choice of methodology must be supported by substantial evidence on the record. 893 F.Supp. at 27. We agree with this assessment and adopt it as our own. Dr. Jhabvala's opinion, while probative of the company he investigated or potentially SRAMs generally, bears little relation to either Hynix or DRAMs. And, as noted by Hynix, the list of projects cited by Commerce is paltry evidence of cross-fertilization, because project names, without proof of the underlying activities, do little to show that all semiconductor R&D has impacted the development of DRAMs. 21 Commerce has failed to offer such relevant evidence as a reasonable mind might accept as adequate to support the proposition that Hynix's product-specific R&D costs are not representative. NTN Bearing, 74 F.3d at 1206 (internal quotation marks and citation omitted). The court's judgment requiring the use of Hynix's product-specific R&D expenses is affirmed.