OT:RR:CTF:VS H338127 RRB
George R. Tuttle, III
3950 Civic Center Drive
Suite 310
San Rafael, CA 94903
RE: Country of Origin of a Silicon Carbide Schottky Diode
Dear Mr. Tuttle:
This is in response to your correspondence, dated February 22, 2024, on behalf of your client, Navitas Semiconductor Corporation ("Navitas"), requesting a ruling concerning the country of origin of a silicon carbide Schottky diode.
FACTS:
The merchandise at issue is a silicon carbide Schottky diode. Silicon carbide diodes are used in various applications, including solar panels, motor drives, uninterruptible power supplies, and electric vehicles.
Navitas explains that third party vendors will produce the bulk silicon carbide wafer material in the United States by growing the silicon carbide crystal substrate (in the form of ingots or boules) in a high-temperature and high-pressure growth environment. After procuring these raw silicon carbide wafers from U.S. vendors, they will be used in the front-end manufacturing of the subject merchandise.
Front-End Processing
All of the front-end processing of the silicon carbide Schottky diode will take place in the United States and will include the following steps:
Single Crystal Growth: This step begins with the placement of a seed crystal of high-quality silicon carbide into a graphite crucible, along with a source material of high purity silicon carbide powder at the required temperature and pressure. The end result is the growth of a highly purified silicon carbide ingot or boule.
Slicing the Silicon Carbide Ingot: The silicon carbide ingot or boule is sliced using a diamond multi-wire cutting saw, which controls warp, bow and total thickness variation.
Double-Sided Grinding: The wafer substrates will undergo double-sided grinding to remove the irregularities of total thickness variation, bow measurement (the deviation of the center point of the wafer surface to the reference surface), and warp (the difference between the maximum and minimum distance between the wafer surface and the reference surface).
Double-Sided Polishing: The wafer substrates will undergo double-sided polishing to reduce the roughness of the substrate to less than 2 nanometers.
Chemical-Mechanical Polishing (CMP): This step further improves the surface quality by reducing the roughness to less than 0.2 nanometers and by eliminating scratches.
Epitaxial Deposition or "Epi-Growth": Epitaxy is a type of crystal growth or material deposition in which new crystalline layers are formed with one or more well-defined orientations with respect to the crystalline seed layer. The deposited crystalline film is called an epitaxial film or epitaxial layer. This process uses a high-temperature chemical vapor deposition (HT-CVD), exposing the wafer substrate to one or more volatile precursors, which react and/or decompose on the substrate surface to produce the desired deposit.
Photolithography: Photolithography consists of techniques that use light to produce minutely patterned thin films of suitable materials over a wafer substrate to protect selected areas during subsequent etching, deposition, or implantation operations.
Photoresist, Exposure, Developing: After the wafers are cleaned and prepared, ultraviolet light is used to transfer a geometric design from an optical mask to a light-sensitive chemical (photoresist) coated on the substrate. The photoresist will either break down or harden where it is exposed to light. The patterned film is then created by removing the softer parts of the coating with solvents known as developers.
Etching and Ion Implantation: When etching is performed, a dry chemical agent removes the uppermost layer of the substrate in the areas that are not protected by photoresist. At this stage, the wafer will undergo etching steps many times before it is complete.
Chip Probing: During chip probing, each die on a wafer is electrically tested to ensure the quality of the dies.
Back-End Processing
In contrast to the front-end operations, all of the back-end processing of the silicon carbide Schottky diode will take place in China and will include the following steps:
Wafer Mount and Sawing: This step involves mounting the wafer backside onto a sticky tape, which is stretched on a wafer frame for easy handling, and then separating the individual silicon chips (die) from each other on the wafer. Lines are sawed into the wafer for each die to prevent any electrostatic issue or contamination.
Plasma Cleaning: This step involves plasma polishing the silicon carbide die as an alternative or complementary process to traditional chemical-mechanical polishing. It removes sub-surface defects, which can improve yield and reduce the die cost.
Die Attach (or Die Bonding): Die attach or die bonding involves attaching the die to a substrate.
Wire Bonding: This is the electrical connection between die and lead frame with the use of gold, copper, or aluminum wires.
Molding: Molding encapsulates the semiconductor die with molding compounds (e.g., black plastic materials) in order to protect the device from the outside environment, such as light, heat, humidity, and dust.
Plating: Plating is the application of a coat of metal over the leads that connect the device mechanically and electrically to the printed circuit board and prevents corrosion and improves solderability.
Trim and Form: This step involves trimming or cutting features of the frame strip that involves shorting the leads together, and then forming the leads into the correct shape and position.
Testing/Laser Marking/Final Visual Inspection: Electrical testing is performed to verify the reliability of the semiconductor. Subsequently, laser marking and final visual inspection are performed to detect any defects.
The final step in the back-end processing is the packing and shipping of the finished semiconductor products for delivery to the customer.
ISSUE:
What is the country of origin of the Schottky diode?
LAW AND ANALYSIS:
The United States Trade Representative ("USTR") has determined that an additional ad valorem duty of 25 percent will be imposed on certain Chinese imports pursuant to its authority under Section 301(b) of the Trade Act of 1974 ("Section 301 measures"). The Section 301 measures apply to products of China enumerated in Section XXII, Chapter 99, Subchapter III, U.S. Note 20(f), HTSUS.
When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. The test for determining whether a substantial transformation will occur is whether an article emerges from a process with a new name, character, or use, different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 69 C.C.P.A. 151 (1982). The substantial transformation determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
Navitas posits that the wafer fabrication and other front-end processing steps in the United States establish the character and use of the silicon carbide Schottky diode, and that none of the back-end processing steps occurring in China will change such character and use. Thus, Navitas asserts that the silicon carbide die in wafer form will not undergo a substantial transformation as a result of back-end processing in China, which merely thins the material and separates the die from the wafer. Accordingly, Navitas seeks confirmation that the country of origin of the silicon carbide Schottky diode will be the United States since a substantial transformation will not occur as a result of back-end processing in China.
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item's components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases.
If the manufacturing or combining process is a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Accordingly, if assembly operations are minimal or simple, as opposed to complex or meaningful, they will generally not result in a substantial transformation.
The Court of International Trade more recently interpreted the meaning of "substantial transformation" in Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016). Energizer Battery involved the determination of the country of origin of a flashlight, referred to as the Generation II flashlight. All of the components of the flashlight were of Chinese origin, except for a white LED and a hydrogen getter. The components were imported into the United States and assembled into the finished Generation II flashlight. The Energizer Battery court reviewed the "name, character and use" test utilized in determining whether a substantial transformation had occurred and noted, citing Uniroyal, Inc., 3 C.I.T. at 226, that when "the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change." Energizer Battery at 1318. In addition, the court noted that "when the end-use was pre-determined at the time of importation, courts have generally not found a change in use." Energizer Battery at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 312 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993).
CBP has examined the country of origin of integrated circuit technology and similar merchandise in various rulings. In C.S.D. 80-227, dated February 13, 1980, CBP found that assembly of silicon semiconductor chips into integrated circuits results in a substantial transformation. There, assembly operations consisted of attachment of the die, attachment of lead wires, encapsulation, testing, and marking. However, C.S.D. 80-227 is silent on what the front-end operations consisted of. In finding that the assembly operations resulted in a substantial transformation, CBP explained that prior to those operations, the "semiconductor chips and other materials [were] of no functional use in their imported state" until assembly operations such as attachment of the die and lead wires and encapsulation were performed on the integrated circuit.
CBP has cited to C.S.D. 80-227 in a number of rulings. Many of these rulings involve older technology such as that described in C.S.D. 80-227, and include very little information about the front-end operations. However, the analytical focus in these rulings is on the operations that provided functionality to the integrated circuits. See, e.g., Headquarters Ruling Letter ("HQ") 732357, dated May 21, 1990; HQ 734518, dated June 28, 1993; New York Ruling Letter ("NY") C80261, dated October 17, 1997; HQ 560753, dated February 10, 1998; NY C84914, dated March 25, 1998; NY M82158, dated April 27, 2006; NY M87019, dated September 28, 2006; HQ W968244, dated October 2, 2006; HQ W968421, dated January 9, 2007; and NY N007032, dated February 23, 2007.
Most recently, in HQ H309802, dated May 27, 2020, CBP considered the country of origin of semiconductor transistors manufactured using silicon carbide substrates. There, the production process consisted of three stages, i.e., substrate construction in the United States, front-end operations in Italy, and back-end operations in China. In HQ H309802, much of the front-end operations (e.g., wafer fabrication epitaxial growth, photolithography, etching, ion implantation) are identical to those at issue in the instant matter. The back-end operations in HQ H309802 are also substantially similar to those that occur in China in the production of the silicon carbide Schottky diode (e.g., wafer sawing, die attaching, encapsulation of the die (molding), testing). Unlike in HQ H309802, where substrate production is a separate initial stage occurring in a different country, substrate production in the instant matter occurs during the rest of the front-end operations, with the placement of a seed crystal of high-quality silicon carbide into a graphite crucible for the growth of a highly purified silicon carbide ingot. In HQ H309802, CBP noted that after the front-end operations in Italy were complete, the merchandise was usable as transistors, whereas the back-end processing in China did not change the character or function of the transistors. After analyzing each of the processing stages in HQ H309802, CBP concluded that the complex fabrication and associated front-end operations in Italy resulted in a substantial transformation of the transistors because it was at that point that the integrated circuits were functional. In finding as such, CBP relied on C.S.D. 80-227. While in C.S.D. 80-227, the functionality of the integrated circuit was rendered by back-end assembly operations that resulted in a substantial transformation, the more complex front-end operations in HQ H309802, which involved newer technology, rendered the merchandise functional.
Other recent rulings also apply CBP's long-standing position that the processes that render an integrated circuit to be functional results in a substantial transformation of the merchandise. For example, in NY N326981, dated July 26, 2022, CBP concluded that the integrated circuits were substantially transformed after front-end operations such as wafer production, lithography, thin film deposition and etching were completed in South Korea, which rendered the merchandise to be fully functional with a pre-determined use. In NY N333934, dated July 28, 2023, which involved similar processing as in NY N326981, CBP also concluded that a substantial transformation occurred following front-end operations such as wafer production, epitaxial deposition, thin-film deposition, photolithography, etching and ion implantation that established the functionality of the integrated circuit.
In NY N337307, dated January 22, 2024, CBP issued to Navitas a country of origin ruling for a product described as a silicon carbide semiconductor transistor, which is similar to the instant merchandise. Much of the front-end operations described in NY N337307 (e.g., single crystal growth, fabrication, epitaxial growth, photolithography, photoresist, etching and ion implantation, chip probing) and back-end manufacturing steps (e.g., wafer mount and sawing, plasma cleaning, die attach, wire bonding, molding, trim and form) are identical to those described in the production of the silicon carbide Schottky diode. There, CBP concluded that the front-end operations in the United States imparted the essence of the merchandise and did not undergo a substantial transformation as a result of the back-end processing in China. In holding as such, CBP noted that the product identity and predetermined end use of the transistors were retained following back-end processing. Accordingly, CBP determined that the country of origin of the silicon carbide semiconductor transistor in NY N337307 was the United States.
Based upon the facts presented, we note that the dominant component that provides character and essence of the silicon carbide Schottky diode is the silicon carbide semiconductor die/chip contained in the wafer. The extensive and complex front-end operations described in your submission, including single crystal growth; fabrication; chemical-mechanical polishing; epitaxial growth; further wafer processing such as photolithography, photoresist, and etching and ion implantation; and chip probing, are what create the silicon carbide semiconductor die/chip. The wafer that undergoes these significant front-end operations contains the die incorporating the complete circuitry of the merchandise. On the other hand, the back-end operations described in your submission, including wafer sawing, cleaning, and trimming only amount to minor processing of a product whose use and identity will already be established by the extensive front-end operations, a position that we have consistently applied in past rulings. See, e.g., HQ H309802, HQ W968244, NY N333934, NY N313340. These back-end operations do not change the character and use of the silicon carbide die, which were already established as a result of wafer fabrication and other front-end operations. Accordingly, the silicon carbide Schottky diode does not undergo a substantial transformation in China during back-end processing.
In sum, where the comparatively minor back-end operations in China will not substantially transform the silicon carbide Schottky diode, the country of origin will be the United States.
HOLDING:
The country of origin of the silicon carbide Schottky diode will be the United States.
Please note that 19 C.F.R. 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by [CBP] field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based."
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy of this ruling, it should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch