E8-12390. Freescale Semiconductor, Inc., New Product Introduction (NPI), Tempe, AZ; Notice of Negative Determination on Reconsideration

On January 3, 2008, the Department issued an Affirmative Determination Regarding Application for Reconsideration for the workers and former workers of Freescale Semiconductor, Inc., New Product Introduction (NPI), Tempe, Arizona (the subject firm). The Department's Notice was published in the Federal Register on January 10, 2008 (73 FR 1896).

The negative determination was based on the Department's findings that the workers at the subject firm are engaged in activities related to the production of Gallium Arsenide (GaAs) semiconductors for the purposes of the design and development of new automotive and cellular technologies; the subject firm did not shift to a foreign country activities related to the design or the manufacturing of GaAs semiconductors; the subject firm did not import articles either like or directly competitive with GaAs semiconductors produced by the subject firm; the workers are not eligible to apply for TAA as secondary workers; and the workers' separation was due to a shift to another domestic facility.

The request for reconsideration alleged that a shift of activities to foreign countries caused the workers' separations. The request stated that GaAs-related activity “does not apply to the NPI department at all” and that “Freescale Compound Semiconductor (CS1) does produce Gallium Arsenide (GaAS) wafers, but that is not an intrinsic part of the NPI function.” The implication is that there are two separate groups of workers at the subject firm—one that produces GaAs wafers and one that is engaged in activity not related to GaAs wafers. The request also states that “Freescale's major customer * * * did receive product from NPI” and that the customer is a TAA-certified company. The request implies that NPI workers are eligible to apply for TAA on a secondary basis.

Information submitted by the subject firm during the initial and reconsideration information revealed that the subject firm had two separate operations: (1) CS1 Factory workers produced GaAs wafers and (2) NPI workers tested and corrected programs and package assembly processes in preparation of mass semiconductor chip assembly that would take place in foreign facilities.

Based on the above information, the Department determines that the subject group includes NPI workers engaged in pre-production testing of semiconductor chips and does not include workers of CS1 Factory producing GaAs-based wafers.

19 U.S.C. section 2272 establishes that a certification of eligibility to apply for TAA, applicable to the subject worker group, shall be issued if:

(1) A significant number or proportion of the workers in such workers' firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated;

(2) Sales or production, or both, of such firm or subdivision have decreased absolutely; and

(3) Increases (absolute or relative) of imports of articles produced by such workers' firm or an appropriate subdivision thereof contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production, or

(4) There has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and the country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States, is a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act or there has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision.

Because the subject workers were engaged in pre-production research and development programs and assembly processes that would take place at foreign production facilities, the Department determines that the subject workers did not produce an article within the meaning of Section 222 of the Trade Act of 1974. It follows, that, since the workers did not produce an article, they could not have been adversely affected by a shift of production or increased imports of like or directly competitive articles.

Further, the reconsideration investigation revealed that the predominant reason for the workers' separations is the shift of pre-production activities to Asia and Malaysia. The Department has consistently held that a shift of non-production activities cannot be a basis for certification.

In order to receive a secondary certification, a significant number or proportion of workers in the subject firm have been, or are threatened to become, totally or partially separated and that the subject firm is a supplier or downstream producer (finisher or assembler) to a firm that employed a group of workers who received a TAA certification, and such supply or production is related to the article that was the basis for such certification.

In addition, if the subject firm is a supplier to a TAA-certified company, either the component parts supplied to that company must account for at least 20 percent of the subject firm's sales or production, or a loss of business by the subject firm with the TAA-certified firm contributed importantly to the petitioning workers' separations or threat of separation; and, if the subject firm is a downstream producer, the TAA certification of the primary firm must be based on a shift of production to Canada or Mexico or import impact from Canada or Mexico and a loss of business by the subject firm with the TAA-certified firm contributed importantly to the petitioning workers' separations or threat of separation.

Even if NPI workers developed test codes for a semiconductor chip that was produced and sold to a TAA-certified customer, the pre-production research and development work does not constitute production, and the workers did not produce an article within the meaning of Section 222 of the Trade Act of 1974. As such, the subject workers are not eligible under secondary impact.

Conclusion

After review of the application and investigative findings, I conclude that there has been no error or misinterpretation of the law or of the facts which would justify reconsideration of the Department of Labor's prior decision. Accordingly, the application is denied.

Signed at Washington, DC, this 29th day of May 2008.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.