Cray Research files antidumping suit; says NEC accepts $65 million loss to gain market share.WASHINGTON--(BUSINESS WIRE)--July 29, 1996--Cray Research today filed an antidumping an·ti·dump·ing adj. Intended to discourage importation and sale of foreign-made goods at prices substantially below domestic prices for the same items. petition charging NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. Corp. with underpricing Underpricing Issuing securities at less than their market value. underpricing The pricing of a new security issue at less than the prevailing price of the same security in the secondary market. Underpricing helps ensure a successful sale. supercomputers in an illegal effort to gain U.S. market share and drive competition from the market. In a filing with the U.S. Department of Commerce and the International Trade Commission, Cray said NEC was taking an estimated $65 million loss to supply vector supercomputers to the National Center for Atmospheric Research The National Center for Atmospheric Research (NCAR) is a non-governmental U.S.-based institute whose stated mission is "exploring and understanding our atmosphere and its interactions with the Sun, the oceans, the biosphere, and human society. (NCAR NCAR National Center for Atmospheric Research (USA) NCAR North Carolina Association of Realtors NCAR National Conference on the Advancement of Research NCAR Navy Center for Acquisition Research NCAR NorCal Aussie Rescue ) in Boulder, Colo. Cray also said the proposed price was significantly less than that charged by NEC on recent major sales in Japan. On May 20, NCAR tentatively agreed to purchase four NEC vector supercomputer systems as part of a five-year $35.25-million contract with the Federal Computing Corp. (FCC (1) (Federal Communications Commission, Washington, DC, www.fcc.gov) The U.S. government agency that regulates interstate and international communications including wire, cable, radio, TV and satellite. The FCC was created under the U.S. ). The National Science Foundation, the primary funding agency for NCAR, had told NCAR that acquisition of the NEC supercomputers was contingent on NCAR demonstrating that the computers were not dumped. NCAR also received bids from Cray and Fujitsu. Cray met all NCAR requirements, but the center opted for the NEC bid, which offered more hardware -- but at a price substantially and illegally below the cost of production. Cray's petition estimates that NEC will lose a minimum of $65 million on the propsed sale. Cray calculates that the systems will cost NEC more than $80 million to produce vs. about $15 million in NEC revenue on the transaction. The balance of the $35.25 million bid price will be paid out to FCC and other vendors for items such as maintenance, installation, disk drives and software. "Cray Research favors open competition based on performance and fair pricing," said Cray President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. Robert Ewald. "NEC's behavior undermines open competition and could permanently distort pricing in the supercomputer market. Behavior like this, if not checked, can lead to less competition and higher prices in the long term. "Cray is the leader in supercomputer technology and that makes us the market leader when competition is fair," Ewald added. In its filing, Cray said NEC has the ability to use profits from other operations to subsidize losses on supercomputers. Cray, the only U.S. manufacturer of vector supercomputers, said it cannot remain profitable if dumping by its competitors requires it to sell its products at a loss. Under U.S. trade law, which is consistent with all international trade protocols, dumping is defined as selling products at a price lower than the cost of production. If NEC is found guilty of dumping and if that dumping causes injury to Cray, the Commerce Department can impose penalty duties equal to the difference between the sale price and the cost of production. Cray Research Inc., the global market leader in supercomputers, is based in Eagan, Minn., and has manufacturing facilities in Chippewa Falls, Wisc. It is a subsidiary of Silicon Graphics Inc. (NYSE NYSE See: New York Stock Exchange : SGI (SGI, Sunnyvale, CA, www.sgi.com) A manufacturer of workstations and servers, founded in 1982 by Jim Clark. The company was founded as Silicon Graphics, Inc., but changed to its acronym in 1999. ) of Mountain View, Calif. CONTACT: Cray Research Robert Udowitz, 202/434-8534 |
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