Introduction

I am the founder and president of the Information Technology and Innovation Foundation (“ITIF”). Founded in 2006, ITIF has been recognized as the world’s top think tank for science and technology policy. Our mission is to formulate, evaluate, and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. In addition to my decades of research and writing on technology and innovation-related topics, I have served on government advisory commissions under U.S. presidents Clinton, Bush, Obama, Trump, and Biden, and I have testified before the U.S. Congress more than 30 times. A core focus of my policy research is China’s predatory strategies for gaining global dominance in advanced technology industries—including in the display sector—and how Section 337 can be a tool to mitigate China’s unfair trade practices.[1]

These comments are in support of robust remedies excluding imports of certain mobile device displays made by various Chinese manufacturers that infringe several U.S. patents of Samsung Display Co., Ltd (“Samsung Display”). Remedies excluding such infringing displays from the U.S. market are vital to the U.S. public interest. The absence of such remedies would lead to continued reliance on Chinese displays in the United States, which is an increasing threat to U.S. national and economic security. Furthermore, the remedies are necessary to counter Chinese IP theft, which is rampant across numerous advanced technology industries. In light of these public interest issues, which are further explained below, the Commission should use its statutory authority to address unfair trade practices by excluding imports of the infringing displays from the U.S. market.

Background

Electronic displays have become an integral part of the economy, representing the key visual and tactile (via touchscreens) human interface for a wide variety of consumer electronics from televisions, computers, mobile phones, tablets, and vehicles to a range of other applications, from medical devices to refrigerators. Displays also play vital roles in national defense capabilities, from the heads-up displays in fighter jet cockpits to the combat information centers on navy ships. Thus, leadership in electronic displays has become critical not just for a nation’s ability to field competitive enterprises in consumer electronics and information and communications technology (“ICT”) industries, but also for their national defense capabilities.

In recent years, Chinese manufacturers have rapidly captured global market share in the display sector, as a result of concerted and largely mercantilist Chinese government strategies to gain global dominance in advanced technology sectors. The largest Chinese display manufacturer by far is BOE Technology Group Co., Ltd. (“BOE”). BOE is regularly among the top 10 annual recipients of Chinese government subsidies, demonstrating the importance of the display sector to China’s industrial strategy. BOE received a total of $3.9 billion in subsidies from the Chinese government from 2010 to 2021, averaging $325 million in subsidies annually; in 2023, BOE received $532 million in subsidies, which was more than the company’s $350 million in profits for the year. In addition to loans and grants, subsidies for Chinese display manufacturers have taken the form of tax breaks, discounted capital, free or discounted land and utilities, and state-provided financing for hiring foreign talent. For example, local government subsidies can cover up to 85 percent of the costs of building a display facility in China.[2]

Chinese display producers have also benefited from extensive foreign IP theft. In July 2023, Korea’s Supreme Court found executives and employees of Toptec, a key input supplier to the display industry, guilty of leaking key technological assets to BOE. In July 2024, a former Samsung engineer was sentenced to six years in a South Korean prison for leaking $24.5 million worth of display technology secrets to China.[3] And now, the ITC’s administrative law judge has determined that certain Chinese displays infringe Samsung Display’s U.S. patents relating to innovations in active matrix organic light-emitting diode (“AMOLED”) display technology.

Without the Remedies, Increased Reliance on Chinese Displays Threatens U.S. Economic and National Security

If Chinese display manufacturers are allowed to continue selling infringing AMOLED displays in the U.S. market, China will continue to capture market share through unfair trade practices, which poses a grave threat to U.S. economic and national security. Fueled by aggressive government subsidies and IP theft, Chinese display makers such as BOE have been depressing profitability for non-Chinese competitors that must earn market-based rates of return to survive. This approach has succeeded in driving most of China’s competitors out of the liquid-crystal display (“LCD”) sector—Japanese companies stopped investing in the sector wholesale around 2010—or precluded other would-be competitors from entering.[4] This is how China’s share of LCD production increased from zero in 2004 to 72 percent in 2024, and its global market share in OLEDs increased from less than 1 percent in 2014 to over 50 percent in 2024.[5]

China’s skyrocketing growth in the display sector and the resulting demise or weakening of non-Chinese display manufacturers puts the United States in a vulnerable position, as it will be forced to depend on China for critical display inputs. This is especially concerning at a time when the United States has taken steps to increase resilience in supply chains for critical ICT sectors and military applications. In a September 2024 letter to Defense Secretary Lloyd Austin, the Chairman of the House Select Committee on China John Moolenaar wrote that “the U.S. national security risk posed by the People’s Republic of China’s (PRC) growing domination of the global display industry” arises from the fact that “displays are increasingly playing a role in many of our advanced weapons systems, from Javelin missiles to drones.”[6] With displays vital to numerous weapons system platforms, the United States needs to ensure there are allied, non-Chinese display capabilities and options for defense purposes alone.

Moreover, China’s increasing capabilities in display manufacturing are likely to spill over to adjacent sectors such as semiconductors. The manufacturing process similarities between fabricating displays and semiconductors are close to 70 percent, meaning that as Chinese display manufacturers develop their capabilities, they will directly contribute to advancing China’s semiconductor capabilities, which are negatively affecting U.S. semiconductor companies.[7] Thus, U.S. national and economic security concerns support countering China’s unfair trade practices and growing dominance by excluding the infringing displays from the U.S. market.

The Remedies Are Necessary to Thwart Chinese IP Theft, Which Is Rampant Across Advanced Technology Sectors

Infringement of U.S. patents relating to the AMOLED display technology is just one example of China’s systemic IP theft across numerous advanced technology sectors. For example, the Office of the U.S. Trade Representative has documented how the Chinese government conducts and supports cyber intrusions to steal intellectual property from U.S. firms, among its many other unfair practices.[8] The FBI averages a new case every 12 hours against Chinese nationals for IP theft.[9] Such practices are driven by China’s primary goal to gain global dominance in the most advanced technology industries.[10]

China’s government-sponsored IP theft is harmful to the U.S. public interest in protecting intellectual property rights. If the Commission determines not to exclude imports of the infringing displays, the impact of that decision would not be limited to the display sector—the U.S. government would effectively be signaling that it is prepared to tolerate China’s widespread practice of stealing U.S. intellectual property. When such practices are left unchallenged, China grows in confidence that it can continue to flout the rule of law in the international arena, and both America and our core allies are weakened. Thus, the remedies from this investigation are necessary to thwart China’s IP theft in all advanced technology industries.

Conclusion

Section 337 was made into law to help address unfair foreign trad e practices. It should be used vigorously to prevent the import of IP-infringing products from firms that systemically benefit from unfair government practices in non-market, non-rule-of-law economies such as China.[11] In light of the significant public interest concerns detailed above, the ITC should impose a robust remedy that excludes the infringing Chinese displays from the U.S. market.

Endnotes