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August 24, 1997updated 03 Sep 2016 12:24pm

CRAY ANTI-DUMPING ALLEGATIONS LIKELY TO STICK, NEC TO APPEAL

By CBR Staff Writer

NEC Corp says it will use all legal measures to appeal against anti-dumping duties that would be imposed on the sale of its supercomputers if the US Department of Commerce rules against it in 45 days time. The department’s investigations were instigated last year, following a complaint by Silicon Graphics Inc’s Cray Research unit that NEC would lose around $65m on the proposed sale of four vector supercomputers to the US National Center for Atmospheric Research (CI No 2,966), in order to gain market share in the US and injure competition. In a preliminary ruling in March (CI No 3,132), the Department of Commerce upheld Cray’s allegations against both NEC and Fujitsu Ltd, that NEC and Fujitsu offered vector supercomputers to US customers at 454% and 173% less, respectively, than their fair value as determined by the department’s analysis of the costs to design, develop, manufacture, and market such systems. And in a statement issued last Thursday, said the case is now proceeding to the International Trade Commission for a final injury ruling within 45 days. If the ruling is affirmative, the Commerce Department says it will issue an anti-dumping order, instructing US customs to begin collecting the duties. NEC maintains that not only are the allegations totally unfounded, but also the investigation is being carried out unfairly. It says the Department of Commerce is working on costing information supplied solely by Cray, whose cost base and methods of accounting differ greatly from that of NEC. For a start, the Japanese giant can spread its development costs across the many varied products that NEC makes. Also, the company is a huge producer of semiconductors, which naturally reduces the costs of the components to the supercomputer division. Finally, NEC says, it does not even use the same technology as Cray – its supercomputers use the newer, lower cost CMOS technology. The company also believes the investigations are not impartial, and that the outcome has already been decided in Cray’s favor. The company told Computergram it had called for Court of International Trade to carry out an independent enquiry, but this has not been done. In a time when large software firms appear to ‘dump’ loads of free software on the market in the guise of bundling, and games companies dump their machines in all sorts of markets, it has always struck Computergram as somewhat unusual that this particular allegation should stick (CI No 2,999). NEC concludes that if the final ruling should go against it, it will use all legal processes to find an impartial resolution to the matter.

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