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.^[1] 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.^[2] 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.

These comments are in support of robust remedies excluding imports of OLED displays made by BOE Technology Group Co., Ltd. and a number of its affiliates (together “BOE”), which were previously found by the Commission to infringe several U.S. patents of Samsung Display Co., Ltd (“Samsung Display”), and more recently have been found to be manufactured using trade secrets stolen from Samsung Display. Remedies excluding these displays from the U.S. market are vital to the U.S. public interest. The absence of such remedies would lead to continued and growing 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 unfairly made BOE 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, allied leadership in electronic displays has become critical not just for America’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. 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.^[3]

As has now been confirmed in two separate ITC investigations, 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.^[4] Last year an ITC administrative law judge 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.  And now another ITC administrative law judge has determined that BOE stole trade secrets from Samsung Display to make OLED display products.

Significantly, the IP theft determined to have taken place in the current case is even greater than the IP theft determined to have taken place in the previous case—and therefore raises even greater public interest and national security concerns—because while the previous case involved certain AMOLED display panel technology, the trade secrets found to have been stolen by BOE in the current case cover the OLED display manufacturing process itself. Indeed, the Notice of Issuance of Initial Determination on Violation of Section 337 stated that the BOE OLED products “were made according to at least one of SDC’s protectible trade secrets.”

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

If Chinese display manufacturers are allowed to continue selling displays in the U.S. market manufactured using stolen IP, 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.^[5] 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.^[6]

China’s skyrocketing growth in the display sector and the resulting demise or weakening of non-Chinese (and U.S.  ally) display manufacturers puts the United States in a vulnerable position, as it will be forced to depend even more than currently 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.”^[7]  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.

Displays now play a foundational role in U.S. military capabilities.  These involve, among other uses, real-time tactical maps, sensor data integration, reconnaissance information, navigation, high speed data processing, target identification, threat detection, integration with weapons systems, command and control coordination, vehicle and aircraft systems, soldier systems, and increasingly integration with AI and machine learning. Military displays are no longer just output devices; they are integral components of modern weapons systems, enhancing situational awareness, decision-making, and overall operational effectiveness on the battlefield.  China’s growing dominance in this technology will mean a combination of defense dependencies on the PRC coupled with high costs, limited innovation and lower quality for allied and American display technology.

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.^[8] Thus, U.S. national and economic security concerns support countering China’s unfair trade practices and growing dominance by excluding from the U.S. market displays manufactured using stolen IP.

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, and theft of trade secrets, are just two examples 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.^[9] The FBI averages a new case every 12 hours against Chinese nationals for IP theft.^[10] Such practices are driven by China’s primary goal to gain global dominance in the most advanced technology industries.^[11]

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 BOE displays manufactured using stolen IP, 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 trade 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.^[12] In light of the significant public interest concerns detailed above, the ITC should impose a robust remedy that excludes from the U.S. market Chinese displays manufactured using misappropriated trade secrets.

Endnotes