CLA-2 OT:RR:CTF:TCM H200429 CkG
Tim Brooks
Qualcomm Incorporated
5775 Morehouse Drive
San Diego, CA 92121
Re: Request for Binding Ruling on the country of origin of an integrated circuit
Dear Mr. Brooks,
This is in response to your request of November 22, 2011 for a country of origin determination on integrated circuits.
FACTS:
The submission states that Qualcomm has a new product line of integrated circuits utilizing “Wafer-Level Packaging” (WLP) technology, which differs from traditional manufacturing of integrated circuits in that the fabrication of the wafer is extended to include device interconnection and protection before the wafer is sawed into die.
The WLP process is performed in four stages: the fabrication process, the front end process, the back end one process, and the back end two process.
The fabrication process starts with a conductive substance called a wafer. A proprietary design is applied to the wafer through a photolithography process using masks to control the layers. In the next process, called diffusion, a gas, liquid or solid is used as a dopant on the wafer which reacts with oxygen atoms to form highly doped oxide or glass. This enables the dopant atoms to diffuse onto the silicon substrate to form a layer of predominantly positive or negative ions. A heating process then drives the atoms deeper into the wafer, activates the implanted ions, and repairs any damage to the wafer. A metallization process of depositing a thin layer of metal allows for the electrical connection of the IC components.
In the front end process, the wafer is encapsulated with a polymer layer leaving select areas exposed. A photo resistance layer is applied to create a mask to protect selected areas of the underlying substrate while a copper plating is applied. The photo-resist is then removed to expose the underlying substrate. A second polymer layer is applied to further encapsulate the wafer, leaving a select area still exposed. In the next process, called under bump metal, an even layer of nickel and gold plating is applied in the exposed area to create a bonding pad for the solder ball.
The back end one process, also known as the ball drop, is where a solder
ball is applied to the wafer. The solder ball is what allows the finished integrated circuit to be connected to the application circuit board, completing the circuit. The ball is then reflowed, shaping it into the desired sphere.
The back end two process subjects the wafer to circuit probe testing to
determine if the individual die on the wafer conform to the expected standard. The wafer is taped off to protect the active surface, and ground down to the desired thickness (roughly 50% of the original wafer size), after which the tape is removed. The backside laminate is then applied and cured. The wafer is subsequently mounted onto an adhesive frame to hold the wafer while being sawed into die. Finally the die are inspected and mounted onto tape and reel to be shipped out.
Qualcomm notes that all of these processes may occur in different countries, but that for the products subject to this ruling, the front end and ball drop are occurring in the same location. Qualcomm seeks confirmation that the country where the front end and ball drop occur is the country of origin for marking purposes.
ISSUE:
Whether the front end or back end manufacturing stages result in a substantial transformation of the integrated circuits at issue?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that, unless excepted, every article of foreign origin (or its container) 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. The term "country of origin" is defined in 134.1(b), Customs Regulations (19 CFR 134.1(b)), 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" within this part.
A substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See United States v.
Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940); and National Juice Products Association v. United States, 628 F. Supp. 978 (Ct. Int’l Trade 1986).
In Headquarters Ruling Letter (HQ) 732357, dated May 21, 1990, CBP found that the processing of Japanese silicon wafers into integrated circuits, which included 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, constituted a substantial transformation. Similarly, in HQ 560753, dated February 10, 1998, CBP found that the assembly and encapsulation of diffused silicon wafers constituted a substantial transformation. See also NY C80261, dated October 17, 1997, and NY M82158, dated April 27, 2006.
In the WLP manufacturing process described by Qualcomm, the encapsulation occurs during the front end process. Furthermore, Qualcomm asserts that the front end processes contributes the most towards the use of the wafers as integrated circuits by enabling connectivity through the metallization layers; the metallization that occurs as part of the fabrication stage creates the receptacles for the electrical connection, and the under bump metal in the front end stage in conjunction with the solder ball drop in the back end one stage completes the circuit. Qualcomm also notes that the front end stage is where the majority of the value add activity occurs, and where the most complicated and intricate IP processes are applied, especially through the metallization application of the redistribution layer (RDL).
We agree that enabling electrical connectivity is a critical step in the processes described by Qualcomm, one that imparts the essential characteristics of an integrated circuit. As the electrical circuit is substantially completed during the front end process, we find that the ICs undergo a substantial transformation during the front end stage of manufacture.
Although the back end stages also contribute significantly to functional use, we do not believe that the circuits undergo a second substantial transformation as a result of these processes. In the back end one/ball drop stage, the integrated circuit is essentially already complete; this stage allows it to be connected to the circuit board, to complete the electrical circuit, but the wafers already possess the essential qualities of an integrated circuit at the end of the front end one process. In the back end two process, the wafer is ground down to the desired thickness in a process known as backgrinding, which in this case reduces the thickness of the wafer by about 50%. This results in the ability to stack and create high density packaging of integrated circuits, lowering overall package height for use in end applications that require increasingly thinner components, such as mobile phones. Backgrinding also allows the wafer to better dissipate heat by lowering the thermal resistance of the die.
CBP has addressed the question of whether backgrinding is a significant operation resulting in a substantial transformation. In HQ W968244, dated October 2, 2006, CBP concluded that the grinding and dicing operations of microcontroller units in die form were simple operations that did not change the name, character or use of the
article. CBP concluded as follows:
…the dicing and grinding of the wafer does not change the essence of the die or purpose for which the die was created. The processing in the Philippines merely separates individual dies and thins the material. Compared to the rulings cited above which found a substantial transformation, the instant processing does not provide any kind of mounting or embedding operation. The grinding operation is done automatically by machine. There is no evidence of an extensive increase in value by merely cutting the wafer into individual dies and grinding. Therefore, the cutting and grinding performed in the Philippines will not substantially transform the article.
Pursuant to HQ W968244, we find that backgrinding, while not an incidental operation, does not constitute a substantial transformation of the integrated circuits at issue.
The integrated circuits at issue are substantially transformed as a result of the front end stage of the post-fabrication process. The country where this processing takes place will be the country of origin for marking purposes.
HOLDING:
The country of origin of the Qualcomm integrated circuits at issue for marking purposes is the country where the front end processing occurs.
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, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief Valuation & Special Programs Branch