The country of origin of transceiver modules

N344720 January 13, 2025 OT:RR:NC:N2:209 CATEGORY: Origin Lisa Murrin Expeditors Tradewin LLC 795 Jubilee DrivePeabody, MA 01960 RE:  The country of origin of transceiver modules Dear Ms. Murrin: In your letter dated December 18, 2024, you requested a country of origin ruling on behalf of your client Accelink Technologies, for Octal Small Form Factor Pluggable transceiver modules. The item concerned is referred to as the 800G OSFP (Octal Small Form Factor Pluggable) DR8 transceiver module. This is a transceiver that will be mounted on each end of a length of fiber optic cable. The subject merchandise is a hot-pluggable module that plugs into network devices, such as switches in data centers. It is used to convert an electrical signal into an optical signal, and conversely an optical signal back into electrical signal. These transceivers are designed for use in 800 Gigabit Ethernet links on up to 500m of single mode fiber. They are used in networking and data communications sectors in order to receive, convert, and transmit different signals. The main components of the OSFP transceiver are the printed circuit board assembly (PCBA), the OSA (optical subassembly), and the transceiver housing. OSA (China-Origin): The OSA includes both a TOSA (transmit optical subassembly) and a ROSA (receive optical subassembly). The TOSA and ROSA are referred to as “Tx” and “Rx.” The Tx (transmitter) part of the OSA is responsible for converting the electrical signals into optical signals and transmitting these signals over an optical fiber strand in the FA (fiber array). It uses a laser diode to generate and focus a light beam into a SiPho (Silicon Photonic) integrated circuit. The photonic integrated circuit splits the light signal into four light beams. An electrical signal from the main PCBA is used to modulate the four light beams which are then launched into the optical fibers of the FA via the isolator focus optics. The Tx part of the OSA is manufactured in China and attached to the Thailand-origin PCBA in China. The Rx (receiver) part of the OSA is responsible for receiving the optical signals transmitted from the Tx and converting them back to electrical signals so that the communication equipment can understand them. The Rx part of the OSA consists of an Rx block, four photodiodes, two single-layer capacitors, and a transimpedance amplifier. The Rx part of the OSA each receives four light beams from optical fibers and sends them to four photodiodes. It is the photodiodes that convert the light signals into electrical signals which are then amplified by the transimpedance amplifier on the PCBA. The Rx part of OSA is manufactured in China and attached to the Thailand-origin PCBA in China. Main Board PCBA (Thailand-origin): The Main Board PCBA contains approximately 560 electrical elements sourced from various countries of origin. The main electrical element is the digital signal processor (DSP) chip of U.S.-origin. This part is the highest value part on the BOM and a critical component of the PCBA. The Main Board PCBA is the foundation of the transceiver and imparts its essence. Without the Main Board PCBA, the Tx part of the OSA cannot generate optical signals and the Rx part of the OSA cannot convert optical signals into electrical signals. The DSP provides for signal amplification, detection, regeneration, and reconditioning. The DSP works with the OSA and provides electrical driving signals for the OSA (both the Tx and Rx). The DSP signals the laser diode of the Tx side of the OSA to emit optical signals into the fiber array and out of the transceivers. The DSP also process optical signals from the fiber array into the transceiver on the Rx side of the OSA. The signal is not readable by the OSA until it is formatted by the DSP chips. On the receiving side, when the optical transceiver receives a signal from the OSA and converts the optical signal to electrical signal, the electrical signal is not readable by the optical transceiver until it undergoes further processing from the DSP. The Main Board PCBA also contains an erasable programmable read-only memory chip (“EPROM”) that will be programmed in Thailand to provide the required instructions to perform the transceiver function. The EPROM information is saved in the flash memory of the MCU IC (Accelink PCBA Part Number 20719401 on the BOM). In addition to the DSP chip and the 4 EPROM, the PCBA consists of approximately 560 electrical components from various countries of origin. More than three-fourths of the total components of the transceiver are on the Main Board PCBA Manufacturing of the Main Board PCBA in Thailand: Production in Thailand includes the creation of the PCBA via surface mount technology (“SMT”). The PCBA consist of numerous components/elements (approximately 560) from various countries of origin. The SMT process is a multi-stage process requiring different types of specialized machines. The SMT process for the PCBA is as follows: 1. Solder paste printing. 2. Solder paste inspection (“SPI”). 3. SMT (surface mounted technology) by means of a pick-and-place machine is used to populate the board with approximately 560 dedicated PCBA components. 4. Solder reflow to permanently adhere the components to the board. 5. Optical inspection (“AOI”). 6. Automated 3D x-ray inspection. 7. Another round of the SMT subprocess, repeating all previous steps. 8. Conformal coating in order to protect the PCBA and its components. The coating is then dried and baked. 9. Manual visual inspection via microscope. Once the PCBA is assembled, it is sent to China where the OSA is attached. Manufacturing Steps undertaken in China: 1. Receive PCBA from Thailand 2. Attach the SiP, laser, and substrate onto PCBA 3. Perform wire bonding 4. Attach the isolator to the PCBA with epoxy curing 5. Attach and align Lens 1 to the PCBA, with epoxy curing 6. Attach and align Lens 2 to the PCBA with and epoxy curing 7. Attach and align the Tx Fiber Array with epoxy curing 8. Rx FA alignment, attach, and epoxy curing 9. Attach a cover to protect the OSA on PCBA 10.Test and inspect the OSA-on-PCBA The OSA-on-PCBA is then returned to Thailand where it is assembled into the finished transceiver. Final Assembly in Thailand: Once the OSA-on-PCBA arrives back in the Thailand, thermal grease is added to the light source in order to ensure heat dissipation and a component for heat release is attached to the light source. Next, an OSA cover is attached to the OSA via a UV curing and baking process. Then the fiber router is attached, which routes fibers between the Tx part of the OSA subassembly, the Rx part of OSA subassembly, and the fiber connectors. Lastly, thermal pads are attached to allow the entire optical transceiver to dissipate heat. Once the above manufacturing in Thailand is completed, the mechanical housing is attached to the parts, the software is loaded, and the transceiver undergoes electrical and optical performance tuning, testing, and quality assurance. You requested a country of origin determination for both marking and Section 301 applicability. When determining the country of origin for purposes of applying current trade remedies under Section 301, the substantial transformation analysis is applicable. See, e.g., Headquarters Ruling Letter (“HQ”) H301619, dated November 6, 2018. 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, 681 F.2d 778 (C.C.P.A. 1982). This determination is based on the totality of the evidence. See National Hand Tool Corp. v. United States, 16 C.I.T. 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993). Additionally, 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 its 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.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 CFR 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines “country of origin” as 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. Based upon the facts presented, it is the opinion of this office that the manufacturing processes that take place within Thailand to create the main PCBA is both substantial and complex. The character of this product is imparted by the main PCBA which would be considered the dominant component of this assembly. The assembly/manufacturing process that takes place in China does not change the end use of the main PCBA. The PCBA does not undergo a substantial transformation as a result of the Chinese processing. Therefore, since a substantial transformation does not occur as a result of the Chinese processing, the country of origin for marking purposes would be Thailand upon importation into the United States and as such, the Section 301 trade remedy would not be applicable. The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. Additionally, we note that the material facts described in the foregoing ruling may be subject to periodic verification by CBP. This ruling is being issued under the provisions of Part 177 of the Customs and Border Protection Regulations (19 C.F.R. 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, please contact National Import Specialist Steven Pollichino at steven.pollichino@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division