MAR 2-05 CO:R:C:V 732357 pmh
Mr. Tom Allen
Kintetsu Intermodal USA, Inc.
P.O. Box 30355
Portland, OR 97230
RE: Country of origin marking requirements for integrated
circuits manufactured in the U.S., Korea and Hong Kong
Dear Mr. Allen:
This is in response to your April 10, 1989 letter on behalf
of your client, Sharp Microelectronics Technology, Inc. (the
importer) requesting a ruling on the country of origin marking
requirements for integrated circuits that are manufactured in the
U.S., Korea and Hong Kong, using silicon wafers manufactured in
Japan. We regret the delay in responding to your request.
FACTS:
According to your letter, your client imports silicon wafers
manufactured by the Sharp Corporation in Japan. The Sharp
Corporation plans on distributing the silicon wafers to various
assembly plants in Korea, Hong Kong and the U.S. At the assembly
plants, the silicon wafers will be cut into integrated circuit-
size pieces which are mounted to the leadframe by eutectic or
epoxy mechanisms. Gold or aluminum wires are then attached to
the circuit and to the leadframe by means of ultrasonic or
thermionic bonding. The leadframe and circuit are finally
encapsulated and the finished circuits are packed.
ISSUE:
For marking purposes, what is the country of origin of
finished integrated circuits that are assembled in Hong Kong,
Korea or the U.S. from silicon wafers manufactured in Japan, and
other materials.
-2-
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C.), provides that unless excepted, every article of foreign
origin imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
article (or container) will permit, in such a manner as to
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article.
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines the country of origin of an article as the
country of manufacture, production, or growth of any article of
foreign origin entering the U.S. Further work or material added
to an article in another country must effect a substantial
transformation in order to render such other country the country
of origin for marking purposes.
To constitute a substantial transformation, a new and
different article of commerce having a new name, character or use
must emerge from the processing. See United States v. Gibsen-
Thomsen Co. Inc., 27 C.C.P.A. 267, C.A.D. 98 (1940). In
addition, factors such as complexity and cost of the processing
operations and whether the essence of the article has been
changed, have also been considered. See Uniroyal Inc. v. United
States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d
1022 (Fed.Cir. 1983).
In a ruling published as C.S.D. 80-227, dated February 13,
1980, Customs determined that assembly of integrated circuits
from imported silicon semiconductor chips, and which included
attachment of the die and lead wires, and encapsulation effected
a substantial transformation. Customs reasoned that the silicon
semiconductor chips and other materials were of no functional use
in their original state before they were assembled in the
finished integrated circuit and that "the use, character, name
and value of a finished integrated circuit is substantially
different from a semiconductor chip."
-3-
Likewise in this case, the processing of the Japanese
silicon wafers into integrated circuits, which includes cutting
the wafers into chips, mounting the individual circuit by
eutectic or epoxy mechanisms to the leadframe, bonding of gold
and aluminum wires to circuit and leadframe and encapsulation of
leadframe and circuit is the same as that described in C.S.D. 80-
227. Indeed, the processing in this case includes the additional
step of cutting the silicon wafers into integrated circuit-size
chips. Consequently, we find that the silicon wafers are
substantially transformed by the processing that occurs in either
Korea, Hong Kong or the U.S. The finished integrated circuits
are products of the country in which such processing occurs.
Those integrated circuits that are products of either Hong
Kong or Korea, should be marked accordingly at the time they are
imported into the U.S. Such marking must be in compliance with
the requirements of 19 U.S.C. 1304 and 19 CFR Part 134. Those
integrated circuits that are produced in the U.S. are not subject
to the requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
We note, however, that the silicon wafers that are imported
for use in the manufacture of the U.S. integrated circuits must
be marked to indicate the country of origin to the ultimate
purchaser in the U.S. Section 134.35, Customs Regulations (19
CFR 134.35), provides that if an imported article will be used in
manufacture, the manufacturer is the ultimate purchaser if he
subjects the imported article to a process which results in a
substantial transformation. In such circumstances, the imported
article is excepted from individual marking; it is sufficient to
mark the bulk container in which they are imported. Since the
U.S. manufacturing operations described above result in a
substantial transformation of the silicon wafers, it is
acceptable to mark the bulk container in which the silicon wafers
are imported.
HOLDING:
The assembly of integrated circuits using imported silicon
wafers and which consists of cutting the wafers into chips,
mounting the individual circuit to the leadframe, bonding gold or
-4-
aluminum wire to the leadframe and encapsulating the leadframe
and circuit constitutes a substantial transformation. The
finished integrated circuit is considered to be a product of the
country in which such processing occurs and should be marked
accordingly, in compliance with the requirements of 19 U.S.C.
1304.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch