Section 301-China Investigation: The Exclusion Process for the $16BN List

To: Office of the United States Trade Representative (USTR) From: Semiconductor Industry Association (SIA) Re: In Support of Product Exclusion Request USTR-2018-0032-2010 The Semiconductor Industry Association (SIA) supports the request of Semiconductor Components Industries, LLC (doing business as ON Semiconductor) to exclude 27 lead inverter power modules under HTS 8542.39.0001 from Section 301 tariffs. SIA is the voice of the U.S. semiconductor industry, one of Americas top export industries and a key driver of Americas economic strength, national security, and global competitiveness. Semiconductors and its value chain are the bedrock of the modern American economy, powering virtually everything digital from cellphones and cars to supercomputers and military systems. SIA advocates for policies to maintain U.S. leadership in semiconductor manufacturing, design, and research. Inverter power modules are used to enable variable speed motors in automotive, household, appliance and industrial applications. As a practical matter, it is difficult to expand production outside China in a timely manner due to cost and complexity of manufacturing. Any new factories must undergo an extensive and complex qualification process to ensure that products meet technical specifications. The qualification process alone can take at least one year, and sometimes longer, on top of the time it takes to install equipment and begin production. This lengthy and costly process puts U.S. companies at a competitive disadvantage compared to foreign competitors whose supply chains are not disrupted, and could lead to substantial lost sales and possible lost market share, undermining U.S. technology leadership in this critical sector. Additionally, the cost of shifting the supply chain and producing in a more expensive business environment would be detrimental to U.S. economic interests as it could reduce planned R&D and capital investments in the U.S., and would likely be passed on to U.S. consumers in the form of increased prices. We therefore encourage USTR to grant this exclusion request.

To: Office of the United States Trade Representative (USTR) From: Semiconductor Industry Association (SIA) Re: In Support of Product Exclusion Request USTR-2018-0032-2008 The Semiconductor Industry Association (SIA) supports the request of Semiconductor Components Industries, LLC (doing business as ON Semiconductor) to exclude SOT-23 diodes under HTS 8541.10.0050 from Section 301 tariffs. SIA is the voice of the U.S. semiconductor industry, one of Americas top export industries and a key driver of Americas economic strength, national security, and global competitiveness. Semiconductors and its value chain are the bedrock of the modern American economy, powering virtually everything digital from cellphones and cars to supercomputers and military systems. SIA advocates for policies to maintain U.S. leadership in semiconductor manufacturing, design, and research. Diodes are a commodity product with wide applications in every market segment. As a practical matter, it is difficult to source SOT-23 diodes from outside China because there is currently a very tight market for these products. This is signaled by the long lead times between when a large customer places an order and when the product is shipped. The lack of available capacity and capability outside of China makes it very difficult to shift supply. To the extent that there existed alternative underutilized factories or subcontractors where capacity could be added, suppliers would have already taken action to utilize these options to expand capacity before U.S. tariffs were announced. The ability to expand production outside China in a timely manner is also constrained by cost and complexity of manufacturing. Any new factories must undergo an extensive and complex qualification process to ensure that products meet technical specifications. The qualification process alone can take at least one year, and sometimes longer, on top of the time it takes to install equipment and begin production. This lengthy and costly process puts U.S. companies at a competitive disadvantage compared to foreign competitors whose supply chains are not disrupted, and could lead to substantial lost sales and possible lost market share, undermining U.S. technology leadership in this critical sector. Additionally, the cost of shifting the supply chain and producing in a more expensive business environment would be detrimental to U.S. economic interests as it could reduce planned R&D and capital investments in the U.S., and would likely be passed on to U.S. consumers in the form of increased prices. We therefore encourage USTR to grant this exclusion request.

To: Office of the United States Trade Representative (USTR) From: Semiconductor Industry Association (SIA) Re: In Support of Product Exclusion Request USTR-2018-0032-2009 The Semiconductor Industry Association (SIA) supports the request of Semiconductor Components Industries, LLC (doing business as ON Semiconductor) to exclude SOD-123 and SOD-323 diodes under HTS 8541.10.0050 from Section 301 tariffs. SIA is the voice of the U.S. semiconductor industry, one of Americas top export industries and a key driver of Americas economic strength, national security, and global competitiveness. Semiconductors and its value chain are the bedrock of the modern American economy, powering virtually everything digital from cellphones and cars to supercomputers and military systems. SIA advocates for policies to maintain U.S. leadership in semiconductor manufacturing, design, and research. Diodes are a commodity product with wide applications in every market segment. As a practical matter, it is difficult to source SOD-123 and SOD 323 diodes from outside China because there is currently a very tight market for these products. This is signaled by the long lead times between when a large customer places an order and when the product is shipped. The lack of available capacity and capability outside of China makes it very difficult to shift supply. To the extent that there existed alternative underutilized factories or subcontractors where capacity could be added, suppliers would have already taken action to utilize these options to expand capacity before U.S. tariffs were announced. The ability to expand production outside China in a timely manner is also constrained by cost and complexity of manufacturing. Any new factories must undergo an extensive and complex qualification process to ensure that products meet technical specifications. The qualification process alone can take at least one year, and sometimes longer, on top of the time it takes to install equipment and begin production. This lengthy and costly process puts U.S. companies at a competitive disadvantage compared to foreign competitors whose supply chains are not disrupted, and could lead to substantial lost sales and possible lost market share, undermining U.S. technology leadership in this critical sector. Additionally, the cost of shifting the supply chain and producing in a more expensive business environment would be detrimental to U.S. economic interests as it could reduce planned R&D and capital investments in the U.S., and would likely be passed on to U.S. consumers in the form of increased prices. We therefore encourage USTR to grant this exclusion request.