Hynix Semiconductor, Inc. v. U.S.

• Decision Date: 13 April 2006
• Docket Number: Slip Op. 06-52.,Court No. 03-00652.
• Citation: 431 F.Supp.2d 1302
• Parties: HYNIX SEMICONDUCTOR, INC., Hynix Semiconductor America, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Infineon Technologies, North America Corp., and Micron Technology, Inc., Defendant-Intervenors.
• Court: U.S. Court of International Trade

431 F.Supp.2d 1302

HYNIX SEMICONDUCTOR, INC., Hynix Semiconductor America, Inc., Plaintiffs, v. UNITED STATES, Defendant, and Infineon Technologies, North America Corp., and Micron Technology, Inc., Defendant-Intervenors.

Slip Op. 06-52.

Court No. 03-00652.

United States Court of International Trade.

April 13, 2006.

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Willkie, Farr & Gallagher LLP (James P. Durling, Daniel L. Porter) for Plaintiffs Hynix Semiconductor Inc. and Hynix Semiconductor America Inc.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director; Ada Elsie Bosque, Commercial Litigation Branch, Civil Division, U.S. Department of Justice; Neal J. Reynolds, Office of the General Counsel, U.S. International Trade Commission (Mary Jane Alves), for Defendant United States.

Collier, Shannon, Scott, PLLC, Washington, DC (Kathleen W. Cannon) for Defendant-Intervenor Infineon Technologies North America Corp.

King & Spalding LLP, Washington, DC (Gilbert B. Kaplan, Cris R. Revaz) for Defendant-Intervenor Micron Technology, Inc.

OPINION

GOLDBERG, Senior Judge.

In this action, Plaintiffs Hynix Semiconductor Inc. and Hynix Semiconductor America Inc. (together, "Hynix") challenge the final affirmative material injury determination made by the United States International Trade Commission ("ITC") pursuant to 19 U.S.C. § 1671d(b) with respect to dynamic random access memory semiconductors of one megabit or above ("DRAMS"), published under DRAMS and DRAM Modules from Korea, USITC Pub. 3616, Inv. No. 701-TA-431 (Aug. 2003) (Final).¹ Pursuant to USCIT Rule 56.2, Hynix moves for judgment on the agency record.

Hynix submitted a Memorandum of Law in Support of Plaintiff's Motion for Judgment Upon the Agency Record ("Pls.' Br."), and the ITC submitted a Memorandum in Opposition to Plaintiff's Rule 56.2 Motion for Judgment on the Agency Record ("Def.'s Br."). Micron Technology, Inc. ("Micron") submitted a Memorandum of Law in Opposition to Plaintiffs' Motion for Judgment Upon the Agency Record ("Micron's Br.").

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1581(c). After due consideration of the parties' submissions, the administrative record, and all other papers herein, and for the reasons that follow, the Court remands to the ITC for further explanation of the causal nexus between subject imports and the domestic industry's material injury in light of the drop in underlying demand for computer and telecommunications equipment during the period of investigation. All other aspects of the ITC's final determination are sustained.

I. STANDARD OF REVIEW

The Court will sustain the ITC's determination unless it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law...." 19 U.S.C. § 1516a(b)(1)(B) (1999). Substantial evidence "does not mean a large or considerable amount of evidence, but rather `such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Pierce v. Underwood, 487 U.S. 552, 565, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938)). Moreover, "the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence." Matsushita Elec. Indus. Co. Ltd. v. United States, 750 F.2d 927, 933 (Fed.Cir.1984) (quoting Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1966)).

The reviewing court may not, "even as to matters not requiring expertise[,] displace the [agency's] choice between two fairly conflicting views, even though the court would justifiably have made a different choice had the matter been before it de novo." Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 95 L.Ed. 456 (1951). "Fundamentally, in reviewing an injury determination under the [statute], this Court may not weigh the evidence concerning specific factual findings, nor may the Court substitute its judgment for that of the [ITC]." Sprague Elec. Co. v. United States, 2 CIT 302, 310, 529 F.Supp. 676, 682-83 (1981).² Such deference is also granted to the ITC regarding its choice of methodology. See Am. Silicon Techs. v. United States, 334 F.3d 1033, 1038 (Fed.Cir.2003).

II. DISCUSSION

Under 19 U.S.C. § 1671d(b), the ITC is charged with determining whether a domestic industry is materially injured by reason of unfairly subsidized imports. See 19 U.S.C. § 1671d(b)(1) (1999). There are two components to an affirmative material injury determination: "a finding of present material injury or a threat thereof, and a finding of causation." Chr. Bjelland Seafoods A/S v. United States, 19 CIT 35, 37 (1995); see also 19 U.S.C. § 1671d(b)(1) (1999) ("The [ITC] shall make a final determination of whether an industry in the United States is materially injured ... by reason of [subject] imports ....") (emphasis added). "Material injury" is defined as "harm [to the domestic industry] which is not inconsequential, immaterial, or unimportant." 19 U.S.C. § 1677(7)(A) (1999). When determining whether subject imports have caused material injury to the domestic industry, the ITC must evaluate three factors: (1) the volume of subject imports; (2) the price effects of subject imports on domestic like products; and (3) the impact of subject imports on the domestic producers of domestic like products. Id. § 1677(7)(B)(i)(I)-(III). In addition, the ITC "may consider such other economic factors as are relevant to the determination...." Id. § 1677(7)(B)(ii).

In this case, the ITC found that the U.S. DRAMS industry had been materially injured by reason of DRAMS imports from the Republic of Korea sold in the United States that the U.S. Department of Commerce found to be subsidized by the Government of Korea ("subject imports"). Views at 3. In concluding that a "material injury" existed by reason of the subject imports, the ITC relied on the following findings: the volume of subject imports both absolutely and as a share of apparent domestic consumption and production was significant; there was "evidence of significant underselling and price depression by subject imports"; and "nearly all of the domestic industry's performance indicators [] during a time of increasing apparent domestic consumption." Id. at 41. Hynix challenges these findings on several grounds.

A. The ITC's Findings Regarding Subject Imports' Increases (1) in Absolute Volume and (2) in Volume Relative to Consumption and Production, Are Supported by Substantial Evidence and Are Otherwise in Accordance with Law.

In evaluating the volume of imports of merchandise, the ITC must consider whether any increase in volume of the subject imports is "significant." See 19 U.S.C. § 1677(7)(C)(i) (1999). After its investigation, the ITC determined that "the absolute volume of subject imports and the increase in that volume over the period of investigation relative to production and consumption in the United States is significant." Views at 29.

Specifically, the ITC found apparent domestic consumption of DRAMS products, measured in billion of bits, increased each year of the period of investigation, from 98.8 million in 2000 to 146.7 million in 2001 and 186.9 million in 2002, and was 55.3 million in interim 2003 compared to 42.8 million in interim 2002. Id. at 30. The absolute volume of subject imports, in billions of bits, increased from [] in 2000 to [] in 2001 and [] in 2002, and was [] in interim 2003 and [] in interim 2002. Id. Concurrently, domestic production, measured in billions of bits, dropped from a level of [] in 2000 to [] in 2001 before increasing to [] in 2002. Def.'s Br. at 13. Additionally, the ITC found that the market share of subject imports increased from [] percent in 2000 to [] percent in 2001 and then decreased to [] percent in 2002 and to [] percent in the first quarter of 2003. Views at 30; Final Staff Report at IV-10. Domestic producers' market share declined from [] percent in 2000 to [] percent in 2001 and subsequently dropped from [] percent in 2002 to [] percent in the first quarter of 2003. Views at 38; Final Staff Report, App. C, Tab. C-1.³

Hynix does not dispute the ITC's factual findings regarding the volume of subject imports, but rather contends that the ITC erred in finding that the volume of subject imports was significant, claiming that the only proper measure of volume increase is an increase in market share. See Pls.' Br. at 10. Because "total bits supplied and total bits consumed have always been increasing dramatically," Hynix insists that "examining relative changes in market shares is the only appropriate means to assess volume."⁴ Id.

Hynix asserts that the market share of subject imports remained small throughout the investigation period, and actually declined at the end of the period. Id. at 11. It argues that a[] percent increase in market share between 2000 and 2002 is a "figurative `blip' on the radar screen" largely driven by the domestic industry's shift to servicing growing demand for DRAMS outside the United States.⁵ Id. at 12. Hynix argues that such an increase cannot be deemed significant for the purposes of volume analysis.

The Court disagrees on both counts. First, the statute provides that an affirmative volume analysis may conclude that the absolute volume of subject imports, or increases in the relative subject import volume (i.e., the market share), is significant. 19 U.S.C. § 1677(7)(C)(i) (1999). "Any one of these calculations is sufficient to support a finding of injury under the statute." Hyundai Elec. Ind. Co., Ltd. v. United States, 21 CIT 481, 485 (1997); see also Taiwan Semiconductor Indus. Ass'n v. United States, 24 CIT 220, 230, 105 F.Supp.2d 1363, 1372 (2000) (finding that a significant increase in the absolute volume of imports is sufficient, by itself, to support a finding that the overall volume...