MAR-2 RR: CTF:TCM W968421 RSD
Michael E. Roll, Esq.
Pisani & Roll
1875 Century Park East, Suite 600
Los Angeles, California 90067
RE: Country of Origin Marking Requirements for Semiconductor Devices; Multiple Country Disjunctive Marking; 19 U.S.C. 1304; 19 CFR 134.46
Dear Mr. Roll:
This is in response to your letter of September 5, 2006, on behalf of Advanced Micro Devices (AMD) requesting a ruling concerning the country of origin marking requirements for certain semiconductor devices and their containers. We also considered your e-mails dated November 20, 2006, and December 7, 2006, which provided an alternative proposal on how the semiconductor devices will be marked to indicate their countries of origin and certain additional information regarding how they are processed.
FACTS:
AMD is an importer of semiconductor devices. AMD’s semiconductor devices are typically made in China, Korea, Malaysia, and Taiwan from wafers that are diffused in Germany, Singapore, Taiwan and Japan. There are two different processes that AMD uses to build the wafers into semiconductor devices depending on the package design. They are as follows:
Process A
cutting the wafers into chips
mounting the individual chips by eutectic or epoxy mechanisms to the leadframe
bonding of gold and aluminum wires to circuit and leadframe
and encapsulation of leadframe.
Process B
cutting the wafers into chips
mounting the individual chips through flip-chip process where bumps or balls on the chip are soldered onto the package substrate
and lid attached onto the package substrate.
You indicate that one of the processes used to produce the semiconductor devices is called diffusion. According to Alan Freedman, The Computer Glossary, Fourth Edition, 212 (Amacom 1989), diffusion is a semiconductor manufacturing process that infuses tiny quantities of impurities into a base material, such as silicon, to change its electrical characteristics. In some cases, AMD has its semiconductor devices diffused in Germany or Singapore. After these semiconductors are diffused, they are shipped to Malaysia where they are cut. When the cutting of the wafers is completed, the dies can be handled in two distinct processes. In Malaysia, the chip capacitor will be attached, testing will be performed, and the lid will be attached. Then the processor will be shipped to Singapore or Suzhou, China for testing, marking and packing. After the testing, marking, and packing operations are completed, the processors can be shipped directly to customers or to an assembler, who will pack them into trays. In an alternative processing procedure, the cut die will be shipped from Malaysia to Shanghai, China where the chip capacitor and lid are attached. Then the chips are shipped to Suzhou, China or Singapore for testing, marking and packing. After that processing is completed, the chips can be shipped directly to customers or to an assembler who will pack them into trays.
There are other instances when the AMD has its wafers diffused in Taiwan or Japan. When the wafers are diffused in Taiwan, they are cut and the chip capacitors and lids are attached in either Taiwan or Korea. Under this process, AMD believes that the country of origin of the semiconductor chips is either Taiwan or Korea. In the situation when the wafers are diffused in Japan, they will be shipped to Taiwan, where they are cut and the chip capacitors are attached. Under this process, AMD believes the origin of the semiconductor chips to be Taiwan.
AMD’s semiconductor devices can be imported into the United States either packed in trays or in retail boxes. For sale to the manufacturers of computer equipment or electronic devices, the semiconductors are imported in trays. Currently, the semiconductors are marked with the country of origin as “Assembled in Malaysia”, “Assembled in China”, “Assembled in Taiwan” or “Assembled in Korea” whichever applies.
For shipments destined to retail distributors, the processors are imported packed in a retail box that contains the processor and a heat sink. Currently, the processor is marked with the country of origin with a legend that reads “Assembled in Malaysia” or “Assembled in China” whichever applies. However, some semiconductor devices, such as the “ESD IC” are not marked with their individual country of origin on the devices themselves.
In addition, AMD will import semiconductor devices for delivery to an assembly company in the United States, who is under contract with AMD, to place the processor and the heat sink into a retail box. At the time of import, the processor is imported in a tray. After assembly, the processors are packed in a retail box and sold to the consumer retail distributors in the United States. Currently the processor is marked with the country of origin legend “Assembled in Malaysia” or Assembled in China” whichever applies. However, again some semiconductor devices are not marked with their country of origin on the semiconductor devices themselves.
You indicate that at the time of manufacture, the end customer, and therefore the country of destination is not always known. You point out that different countries may have different rules for determining the country of origin of integrated circuits. In addition, different countries have different requirements for what country of origin information must be disclosed on such products. This has resulted in AMD having a difficult time in developing a uniform country of origin marking for its products. You claim that having these different standards for the marking of products causes inefficiencies.
In addition, the packed in box assemblers commingle the processors in shipping containers for bona fide commercial reasons. The reasons why AMD claims that its semiconductor chips are commingled is because the chips are fungible, and keeping track and segregating the semiconductor chips according to their country of origin is expensive and burdensome. Based on this practice, AMD’s shipping containers filled with semiconductor devices can have products of Chinese or Malaysian origin commingled together. Although some of AMD’s semiconductor devices are marked with their actual country of origin, requiring each shipping container that contains commingled products to be marked with the specific country of origin combinations contained within the container would add significant expense and delay to the distribution of AMD’s products.
AMD is proposing to use a single country of origin marking legend regardless of the ultimate country of importation. In an email received on November 20, 2006, you indicate that AMD has modified its country of origin marking proposal to read as follows:
Diffused in Germany, Japan, Singapore or Taiwan
Product of China, Korea, Malaysia or Taiwan
You also explain that the actual country of origin of the processors will be noted on the commercial invoice generated by AMD’s system of records. The commercial invoice will denote the quantity from each country, the country of diffusion, as well as the country of origin, as this is tied to the lot number of the wafer. Although some customers do not receive a copy of this invoice, the country of origin of a processor can be tracked and provided to the customer by use of the lot number.
You also claim that generally many of AMD’s products are too small to be individually marked with AMD’s proposed marking. Therefore, you are requesting that the containers or cartons in which the processors are shipped be marked in lieu of marking the semiconductors themselves.
ISSUES:
Whether the proposed country of origin marking using disjunctive language for semiconductor devices cited above satisfies the requirements of the country of origin marking under 19 U.S.C. 1304.
Can the containers or cartons in which the semiconductor devices are imported into the United States be marked with the country of origin marking instead of marking the semiconductors themselves?
Does the proposed country of origin marking satisfy the special marking requirements set forth in 19 CFR 134.46?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the United States 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 United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
Part 134 of the Customs Border Protection (CBP) Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), of the CBP Regulations, (19 CFR 134.41(b)), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain.
Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), provides that: "country of origin" means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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.
A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). In Headquarters Ruling Letter (HQ) 732357, dated May 21, 1990, CBP held that the processing of silicon wafers into integrated circuits, which includes cutting the wafers into chips, mounting the individual circuit by eutectic or epoxy mechanisms to the lead frame, bonding of gold and aluminum wires to circuit and leadframe and encapsulation of leadframe and circuit constitutes a substantial transformation of the silicon wafers into finished integrated circuits. CBP cited C.S.D. 80-227, dated February 13, 1980, as authority for the finding of a substantial transformation where silicon semiconductor chips were assembled into integrated circuits.
For purposes of this ruling, we will assume that the assembly process performed abroad results in a substantial transformation and that accordingly, the country of origin will be the country where the various components are assembled together to produce the semiconductor devices. See also HQ 732357 dated May 21, 1990; HQ 560753 dated February 10, 1998; and HQ 562308 dated September 6, 2002.
Next, we must consider whether the above cited proposed country of origin marking statement for AMD’s semiconductor devices that uses a disjunctive multiple country listing will satisfy the requirements of 19 U.S.C. 1304. We note that CBP‘s policy is that in most circumstances, it is not acceptable for purposes of 19 U.S.C. 1304 to mark an article with the legend "Product of ____ or ____". In C.S.D. 89-111, dated April 20, 1989, certain effervescent enzymatic cleaner tablets from either West Germany or the U.S. were packaged into retail containers. While CBP acknowledged that the seller could avoid expense by using the disjunctive marking, "Tablets Made in West Germany or the United States", CBP held that fully accurate marking would not amount to an economic prohibition, and, therefore, required the package to be marked with only the actual country of origin. Otherwise, the disjunctive marking would do no more than indicate the possibility that the tablets may be of foreign origin. (It was also noted that since only one foreign source was involved, West Germany, and the packages would contain either tablets from the U.S. or West Germany, only one label was necessary to satisfy the country of origin marking requirements. When the tablets were of U.S. origin, no country of origin marking was necessary.)
However, in several previous decisions, CBP has addressed the issue of disjunctive multiple country of origin marking requirements with regard to integrated circuits. In T.D. 75-187, dated July 22,1975, CBP allowed a disjunctive listing of multiple countries of origin when the articles (semiconductor devices, including transistors, diodes, and integrated circuits) were commingled for a bona fide reason, and subsequently repackaged for sale to an ultimate purchaser. This determination was based on the situation where a manufacturer would commingle many devices of the same type from various countries during the testing and symbolization marking process. This method of marking was permitted because when devices are commingled for bona fide reasons, it becomes difficult for CBP to enforce the normal requirement that each imported article be marked with its actual country of origin. See also C.S.D. 84-56 dated December 12, 1983, where CBP allowed fasteners to be marked "from one or
more of the following countries...." to indicate the country of origin of fasteners, where there were many varieties from many countries. The major source countries were required to be indicated.
In HQ 562308 dated September 6, 2002, based on the information received in connection with a request for reconsideration, we were satisfied that the integrated circuits in question were commingled due to the need to break the lots down into smaller lots for testing and subsequent repackaging. Therefore, we found that the outermost container of the integrated circuits could be marked with the disjunctive marking: “Made in one or more of the following countries: Philippines, Korea, Taiwan, Hong Kong, Singapore, Japan, or France.”
In this instance, you indicate that the assemblers commingle the semiconductor devices in the shipping containers for commercial reasons. You have pointed out that the semiconductor chips are fungible and that it is expensive and burdensome to segregate the inventory of semiconductor chips from the different countries by their country of origin. Based on this practice, a shipping container can have products from China and Malaysia commingled together. Consequently, requiring each shipping container that contains commingled products to be marked with the specific country of origin combinations that is actually inside the container would add significant expense and delay to the distribution of AMD’s products. Therefore, in accordance with the analysis set forth in T.D. 75-187 and HQ 562308, we find that the proposed marking “Product of China, Korea, Malaysia or Taiwan” is an acceptable country of origin marking that satisfies the requirements of 19 U.S.C. 1304 for indicating the country of origin of AMD’s semiconductor devices that are the subject of this ruling.
You also indicate that AMD wants to be able to mark the containers or cartons in which the semiconductor devices are shipped with their country of origin marking instead of marking the semiconductor devices themselves. You further indicate that the semiconductor devices are often very small, and it would be very difficult to put on a legible country of origin marking on the semiconductor devices. 19 U.S.C. §1304(a)(3)(D) provides an exception from the country of origin marking requirements of 19 U.S.C. 1304 for articles for which the marking of the containers will reasonably indicate the origin of the article. However, for an exception to be granted under 19 U.S.C. §1304(a)(3)(D), the article must generally be imported in a marked container that will reach the ultimate purchaser. See also, 19 CFR 134.32(d). Accordingly, if the semiconductor devices are imported in containers that are legibly and conspicuously marked to indicate their country of origin of their contents, and the CBP officials at the port of importation are satisfied that the semiconductor devices will reach their ultimate purchaser in these marked containers, then the individual semiconductor devices can be excepted from having to be marked to indicate their country of origin.
You indicate that a number of countries, including the European Union, require the disclosure of information regarding the countries where semiconductor devices are diffused rather than the countries where they are assembled. Thus, in order to have a uniform system of marking on the containers for these products, the proposed country of origin marking statement, in addition to indicating the countries of origin according to the United States standards, will also mention the countries where the imported semiconductor devices are diffused. This means that the containers used to ship the semiconductor devices will reference countries other than the country of origin of the semiconductor devices. Since the proposed marking statement contains references to countries other than those that we consider to be the country of origin of the semiconductor devices, we must consider whether the special marking requirements of 19 CFR 134.46 would be triggered.
19 CFR 134.46 provides that in any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchase as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. Therefore, we must determine whether the proposed marking may mislead or deceive the ultimate purchaser as to the actual country of origin of the imported article. CBP stated in Treasury Decision (T.D.) 97-72, dated September 19, 1997, in response to a comment, that "references to the U.S. made in the context of a statement relating to any aspect of the production or distribution of the products...are misleading to the ultimate purchaser...". We find that the phrase "Diffused in One or More of the Following Countries: Germany, Japan, Singapore or Taiwan” in the proposed marking statement relates to an aspect of the production of the imported article and therefore, it may mislead or deceive the ultimate purchaser in the United States as to the actual country of origin of the semiconductor devices. Therefore, we find that the special marking requirements of 19 CFR 134.46 are triggered. The words "Made in (country of origin,)" "Product of (country of origin)” or a similar phrase must appear in close proximity and be in at least a comparable size to the non-origin geographical reference. However, we note that the proposed country of origin marking statement on the packaging for the semiconductors that you have presented will contain the words "Product of” and that it will be in close proximity to and will be in at least a comparable size as the wording that indicates the countries where the semiconductors are diffused. Therefore, we find that the proposed country of origin marking statement would satisfy the requirements of 19 CFR 134.46 and 19 U.S.C. 1304.
HOLDING:
We find that marking only the outermost shipping containers containing the imported semiconductor devices with the above-described proposed disjunctive multiple country of origin marking statement is acceptable in this case.
The mention of the countries where the semiconductor devices are diffused on the shipping containers triggers the special marking requirements of 19 CFR 134.46. However, the proposed country of origin marking statement complies with the special marking requirements of 19 CFR 134.46. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch