Re: Country of origin marking of VR Headsets; Section 301

HQ H359216 May 21, 2026 OT:RR:CTF:VSP H359216 ACH CATEGORY: Origin Ms. Suzanne Kane Akin Gump Strauss Hauer & Feld LLP 2001 K Street, N.W. Washington, DC 20006-1037 Re: Country of origin marking of VR Headsets; Section 301 Dear Ms. Kane, This is in response to your correspondence, dated March 26, 2026, requesting a binding ruling on behalf of your client, [ ], concerning the country of origin of a Virtual Reality (“VR”) Headset System, for marking, entry, and Section 301 purposes. You have requested that certain information submitted in connection with this request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in your request will not be released to the public and will be withheld from published versions of this ruling. FACTS: The VR Headset System is a three-part, VR and mixed reality (“MR”) system that performs a suite of computing and data processing tasks, including executing applications for entertainment, media, and productivity purposes. The VR Headset System consists of the following three components: (1) The Headset, which is a head-mounted display (“HMD”) that contains lenses and serves as the display of the device. The Headset has user-facing sensors that track the hands, eyes, and face of the user; converts the user’s motions to signals and sends them to the below-described “Puck,” and receives and converts data from the Puck to display on the lenses; (2) The Puck, which conducts the main computing and data processing functions of the VR Headset System. The Puck’s components manage the computing, data processing, storage, graphics processing, WiFi/Bluetooth connectivity, power, and thermal aspects of the system. It runs a [ ] OS that is pre-installed on the device and stores and executes a library of entertainment and social applications that are installed automatically upon the device set-up, as well as applications that users can create or download from third-party websites following a simple initial verification; and (3) A tether cable that connects the headset to the Puck. All three of the above components must be connected for the VR Headset System to function. The Headset is embedded with firmware that interacts exclusively with the Puck and cannot function independently of the Puck, even if physically connected to other devices. If connected solely to a tablet by a USB-C cable, the Headset could not control or transmit images for display on the tablet, or vice versa. The VR Headset System can be paired and used with standard peripheral devices for computers (e.g., a Bluetooth-enabled keyboard, mouse, gaming controllers, etc.). It can also be connected to separate computing and communications devices such as computers, phones, and gaming consoles, and, when so connected, these devices extend the display of media such as videos, photos, and text from the Headset. The Puck includes the following main components:  The main logic board (“MLB”) that stores applications, runs the OS, performs the computing and data processing functions of the VR Headset System, and executes the applications with which the user can interact through the Headset;  Between 1,100 and 1,200 MLB sub-components, including the following: o A Taiwanese-origin [ ] Chipset System-on-Chip (“SoC”), which is the main processing unit and contains a graphics processing unit that runs the applications and content with which a user interacts; o A Memory/Storage Chip from Korea, Taiwan, or China, which contains non- volatile storage for the OS, applications, and system resources;  One supporting printed circuit board assembly (“PCBA”), mounted with three switches and connectors that interact with the MLB to allow the user to trigger a reset of the device;  Wireless link radio frequency integrated circuits (“RFICs”) that wirelessly connect the Puck to a WiFi network, from which it can download new content and deliver that content to the Headset display. The Puck controls all wireless communications.  Battery and power management integrated circuits (“ICs”) that manage power delivery for the Puck to operate, including when it is disconnected from an external power source. In the Puck, the largest portion of the components’ cost comes from Taiwan, and the largest quantity of the components comes from China. Between 1,100 and 1,200 of the around 1,300 components in the Puck are mounted to the MLB by surface mount technology (“SMT”), which occurs in Vietnam. The most expensive component on the MLB is produced outside of China—namely the [ ] Chipset, which is manufactured in Taiwan. Chinese components account for over 25% of the total MLB components by cost. The components of the Headset include: 2  Six PCBAs that aggregate inputs from user motions and audio to provide to the Puck for processing, manage sensors that communicate data to the Puck via tether, and receive data from the Puck to display to the user on the lenses;  Between 1,200 and 1,300 PCBA subcomponents and integrated circuits, including: o A Microcontroller Unit (“MCU”) that manages the data aggregation, timing of sensors, and communication of the sensor data from the Headset to the Puck; o Field programmable gate arrays (“FGPAs”), which are flexible integrated circuits that can be programmed and designed to device specifications; o Nordic Radio Frequency (“nRF”)/Bluetooth chips that support the low-power usage of Bluetooth applications; o Light emitting diode (“LED”) drivers that help power the device by converting incoming power as required for the output;  Display and Optical Modules and Lenses that collect data from the PCBAs to project images to the user.  Cameras and Depth Sensors that primarily conduct positional tracking and depth perception functions to allow the device to locate itself within a particular space;  Audio circuitry, including microphones that capture audio and audio transducers that collect data to provide the audio experience for the user via the System PCBAs. In the Headset, the largest portion of both the components’ cost and quantity comes from China. Between 1,200 and 1,300 of the over 1,400 components in the Headset are mounted to the six supporting PCBAs by means of SMT in Vietnam. Other major components, including the display and lenses of the Headset, the camera and depth sensors, and the audio circuitry, allow users to access the content and data generated by the MLB and supported by the seven supporting PCBAs. Together, the system PCBAs account for a majority of the total BOM components by quantity. The tether cable/interconnect is an optical cable that converts electrical signals to fiber and back. The tether connects the Puck and the Headset, and, without the tether, neither component could function. The manufacturing steps for the VR Headset System will occur in four main stages: (1) the production of 2,700 to 2,800 components individual components in 10 different countries including Vietnam, China, Taiwan, the Philippines, Korea, Japan, Singapore, Malaysia, the United States, and Austria ; (2) production of the VR Headset System’s main PCBA (the MLB)—which is in the Puck—in Vietnam by means of SMT, software download and testing of the PCBAs; (3) production of seven Supporting PCBAs in Vietnam by means of SMT, software download, and testing of the PCBAs; and (4) final assembly, final software downloads, testing of the Headset and Puck and packout (“FATP”) of the VR Headset System in China. SMT of the MLB in Vietnam involves incorporating between 1,100 and 1,200 electrical components onto both sides of a bare PCB. Meta states that the MLB executes the computing, data and graphics processing, connectivity, and sensor integration and, therefore, this process creates the “brain” of the VR Headset System. The largest portion of the MLB’s components’ 3 quantity comes from Taiwan, and the largest portion of the supporting PCBA’s components come from Japan. SMT of the MLB requires several weeks of on-line manufacturing training for workers. SMT of the MLB line cycle takes over four hours to complete, with a total direct labor requirement of over 20 on-line operators. The importer states that, with few deviations, the SMT processes for the seven supporting PCBAs are similar to the SMT process for the MLB described above. After SMT, the eight Vietnamese-origin PCBAs will be shipped to China for FATP. For the Puck, FATP involves snapping, pasting, bending, and screwing the Puck sub-components and components together. The importer states that this process takes less than 8 minutes, a majority of the assembly is automated, and that none of the steps involved in the Puck FATP will alter the characteristics of the MLB that emerge from SMT in Vietnam. FATP of the Headset takes less than an hour of assembly time, though glue curing time takes significantly longer. FATP of the Headset includes assembly of the camera module, outer frame, optical module, left temple module, right temple module, membrane module, main line assembly, and main line test validation. The importer states that the steps involved in the Headset FATP will not alter the characteristics of the seven supporting PCBAs that emerge from SMT in Vietnam. ISSUES: 1. What is the country of origin of the Headset? 2. Is the Headset subject to Section 301 measures? LAW AND ANALYSIS: (1) Country of Origin Marking The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, “every article of foreign origin (or its container …) 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 manner as to indicate to an 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 imported goods the country of which the goods {are} 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). 4 Part 134 of Title 19 of the Code of Federal Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. 19 C.F.R. § 134.1(b) provides as follows: (b) Country of origin. “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” within the meaning of {the marking laws and regulations}. 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. Texas Instruments Inc. v. United States, 681 F.2d 778 (CCPA 1982). This determination is based on the totality of the evidence. National Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). The U.S. Court of International Trade (“CIT”) has stated that “if the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred.” Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 1029 (Ct. Int’l Trade 1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983) ( per curiam). 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, or use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the manufacturing process may be considered when determining whether a substantial transformation has occurred. No one factor is determinative. See e.g., Headquarters Ruling Letter (“HQ”) H311606, dated June 16, 2021; and HQ H302801, dated October 3, 2019. The CIT has indicated that “{f}or courts to find a change in character, there often needs to be a substantial alteration in the characteristics of the article or components.” Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308, 1318 (2016) (citing Ran-Paige Co., Inc. v. United States, 35 Fed. Cl. 117, 121 (1996) and Nat’l Hand Tool Corp. v. United States, 16 Ct. Int’l Trade 308, 311 (1992)). Courts have also considered “the ‘essence’ of a completed article to determine whether an imported article has undergone a change in character as a result of post importation processing.” Id. (citing Uniden America Corp. v. United States, 120 F. Supp. 2d 1091, 1095-1098 (Ct. Int’l Trade 2000) and Uniroyal, Inc., 542 F. Supp. 1030). In Uniroyal, Inc., 542 F. Supp. at 1029-1030, the court determined that the shoe upper was “the very essence of the completed shoe” and that the attachment of the imported shoe uppers to an outer sole in the United States was a “minor manufacturing or combining process which leaves the identity of the upper intact,” therefore, the shoe upper was not substantially transformed in the United States. The court also noted that the minor assembly operation in the United States “require{d} only a small fraction of the time and cost involved in producing the uppers.” Id. at 1030. 5 “CBP has consistently held that the assembly of components onto a printed circuit board is a substantial transformation.” HQ H311447, dated September 10, 2020. “With respect to printed circuit boards, Customs has ruled that the complete assembly of all the components onto a printed circuit board was a substantial transformation of the printed circuit board because the assembly process was complex and involved a considerable amount of skill and time.” HQ 735306, dated December 21, 1993. “The SMT operations result in a new and different product with an overall use and function different than any one function of the individual components. Each individual component serves a particular purpose or function once incorporated into the PCBA. Prior to the SMT operations, these components are stand-alone, general use items.” HQ H302801, dated October 3, 2019. The subject VR and MR/VR Headsets are similar in some ways to the wearable electronic smart device in HQ H302801. In that ruling, CBP considered the country of origin of a Fitbit device. CBP determined that, as in HQ H287548, dated March 23, 2018; New York Ruling Letter (NY) N303008, dated March 8, 2019; and HQ H301910, dated August 5, 2019, the Fitbit’s PCBA represented the essence of the Fitbit device because it incorporated the electronic components that together gave the smart device its functionality and enabled the device to operate as intended. In HQ H302801, CBP stated that “{t}he unique and full functionality of Fitbit’s devices is only accessed once the components and subassemblies are integrated and populated into the PCBA,” which is accomplished by using the SMT process in Taiwan or in another country such as Malaysia or Indonesia. The individual components, such as the Bluetooth transceivers, once incorporated into the PCBA through the SMT process, lose their identity because they cannot “individually carry out the functions of … a smart watch or … track{} the user’s fitness and activity,” and become “an integral part of the new article.” CBP further stated that the final assembly process in China, which involved “{a}ttaching the PCBAs into the housing with the vibration motor, battery, display, and wristband” did not render the PCBAs into a product with a new name, character, or use. Moreover, CBP determined that the final assembly process required less training for the workers than the SMT process and was not time intensive. Accordingly, CBP concluded that the final assembly process in China did not substantially transform the PCBAs. CBP concluded that the SMT operations in Taiwan or in another country, such as Malaysia or Indonesia, “result{ed} in a substantial transformation of the electronic components from Taiwan and the Philippines into a new and different article of commerce with a new name, character, and use distinct from the components.” Accordingly, CBP determined that the country of origin for the Fitbit device was where the SMT operations occurred. Further, in HQ H322417, dated February 23, 2022, CBP found that the PCBAs were the essence of a smartwatch with a different name, character, and use than the components and the blank circuit board that underwent the SMT process. The smartwatch was composed of between 800 and 900 components, more than 700 of which were incorporated into two PCBAs using the SMT process in Taiwan. When incorporated onto the PCB, the individual components and the blank PCB developed a new name, a PCBA. See HQ H311447, dated September 10, 2020 (stating that “CBP has consistently held that the assembly of components onto a printed circuit board is a substantial transformation”), and HQ H302801. 6 In addition, in HQ H345669, dated July 23, 2025, HQ H348154, dated August 29, 2025, and HQ H348983, dated October 20, 2025, CBP determined that the PCBAs were the essence of smart glasses and that the smart glasses were products of the countries where the PCBAs were manufactured through SMT. The PCBAs in the smart glasses handled heavy computing, including photo and video processing, wireless communication, and AI functionalities. The finished PCBAs also collected all audio and visual inputs from the components to play audio, take pictures, enable touch/button control, access AI features, and connect to a smartphone. Further, the PCBAs incorporated a large number of the overall components used in the smart glasses, and assembly of the PCBAs took a significant amount of time. However, the country of origin of a PCBA does not automatically determine an article’s country of origin. In HQ H328859, dated June 10, 2024, CBP found that, even though the PCBA of a printer was manufactured in Japan, the country of origin of the printer was China. In H328859, by quantity, approximately 97 percent of all components were produced in China. Further, CBP found that, although the PCBA and Japanese-origin firmware enabled the thermal printers to communicate with external devices and process the images to be printed, other components and assemblies were also critical in enabling the printer to form text or images and apply heat to the paper to create text or images. As for the Headset at issue, the individual components and the blank circuit board undergo a change in character when the components are assembled onto the blank circuit board and become a PCBA via the SMT process. The PCBAs in the instant case, like the PCBAs in HQ H302801, form the “brain” of the device and enable the device to function as intended by design. Through the SMT process, the components change in character from individual components capable of limited functions and a blank circuit board incapable of any functions to PCBAs that represent the essence of the Headset because they enable the Headset to function. The individual components and the blank circuit board undergo a change in use when the components are assembled onto the blank circuit board and become the PCBA via t