Export restrictions when sourcing parts for PCB assembly in foreign country

Question

If a company has a PCB design and wishes to assemble them economically, a natural choice is China. Some Chinese companies are asking for the parts (or some of them) to be shipped to them. This means buying the parts locally, shipping them (export), having them assemble the PCBs and shipping back (import).

In a specific case, the design company is in the USA, and the assembly house is in China. The design includes a Texas Instruments RF chip (CC113L) and a MCU (MSP430). Actual quantity is 1000.

What regulations do you need to comply with for this 'temporary export for fabrication purposes' and do you know of any special considerations to take into account?

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PS. For the 'off-topic' sheriffs of the site, please allow me to reference a couple of reasonably high voted similar questions, with the hope of giving this question a little time to live.

• Export restrictions on programming equipment
• Export restrictions on components like FPGAs

Answer 1

This isn't a question with one clear answer, and this problem is one of the big reasons why larger companies trying to outsource to China will always send somebody to oversee the process locally.

In general, this is not a question of 'how to handle these matters', but it is a question of specifically which regulations you need to comply with. Before you start your first zero series, you let your lawyer figure out exactly which regulations there are for your electronic product in the target market countries. There are specialized lawyers for this kind of stuff and they are worth their weight in gold. Things can get very complicated when you want to sell a product over multiple continents, so you're probably going to spin multiple variants of your product to account for that.

Once you have a clear list of regulations to observe, you first make sure you find an assembly house that is certified according to ISO9001:14001. This is a very formal way of saying that such a company won't risk sourcing shoddy shenzhen market components to shave off a few cents, and that the company will act in accordance with your formal wishes. Then you give them a distilled-down version of all the specific things you wish them to do for you to comply with all the regulations. For instance, for the Netherlands:

• All components are RoHS, halogen free. Any replacement or revision is communicated and tested before substitution in the assembly line.
• Flux and solder shall be used in accordance with RoHS
• Component alignment is in accordance with [forgot the ISO-number], and you usually supply a document with inspection guidelines
• Boards shall be washed at least twice until no visible residue is left, with a washing agent that doesn't leave toxic substances, either from the washing agent or flux residue
• Board material is UL 94-V rated, UL number and flammability rating are printed in copper and silkscreen in a location visible to an external inspection agency (e.g. TNO/KEMA here, FCC in the US)
• Packaging is designed in such a way to safely transport lithium ion batteries separate and non-functional (e.g. with sticky plastic covering), charged at most 80%, air shipment is insured and liability is fully covered

Just an example, this is close to all you need to tell the assembler and packager. Last time I was involved with production it was literally just 2 or 3 pages of instructions plus the assurance that we were dealing with somebody who would actually read and understand this (which you will verify with the zero series production). ISO9001:14001 helps a lot, if a company doesn't comply they can be punished by the auditors and they don't want to risk that (it's a pretty expensive audit).

Most other regulations are dealt with on other levels: component choice, layout, electromechanical product design, packaging, shipping, sometimes obsolescence planning and warranty. You won't need to communicate that with your production partner. The examples you give on export restrictions are something you deal with as a design engineer more than anything else; well-known examples are FPGAs, PV solar cells, microbolometers, photon multiplier tubes and radioactive substances.

Answer 2

The definitive answer in your case (US) is ITAR and the USML (US Munitions List) readily available on the state department web site.

The easiest for you will be to check with the manufacturers. The USML parts will definitely tell you.

Some distributors slap warnings on everything which frighten people off. You need to check on a case by case (or rather chip by chip) basis.

Answer 3

(This is not legal advice, just my understanding as someone who deals with this stuff professionally).

If something is ITAR controlled you must not export it (or even detailed documentation regarding it) without the proper paperwork (probably a permit). Some kinds of sensors and other things are covered, as well as actual munitions. Likely if you're dealing with that sort of thing (precision inertial guidance systems, space-related technology, night vision technology, etc.) you'd probably already know it. Even if you import something from a country A you can't necessarily send it back to country A for repair without proper documentation. Handing a sensor across the table at Denny's in Idaho to the wrong person could land you in jail, as a deemed export. Sending your drawings for a quote could be a big mistake. Silly, perhaps but the potential penalties are severe (premeditated murder might be treated more lightly than an infraction). That's the US State Department.

There are also restrictions imposed by the US Commerce Department which may target specific companies or items based on what they are, who they are, or the end use.

Big companies tend to have a compliance department that deals with this.

In practice, ordinary bits like MCUs and such like are not a problem, and in fact can probably be procured more cheaply in China than sending them yourself (I tend to worry more about the quality of passives). High end FPGAs might be an issue, as well as things that can be used to build high-end radar systems and wide dynamic range accelerometers.

Answer 4

We outsourced assembly to China only once, and we've got our whole component shipment delayed at chinese customs for a month for just one component: a simple JST plastic through-hole connector. We've got GPS units, MCUs, resistors, capacitors, opamps, etc. in our shipment, but that particular connector was problematic who knows why. It was held in customs until we could clear the component out with some certificate (China Compulsory Certification or CCC). The joke here is that it was a connector bought from Digikey... made in China! Go figure. So, don't underestimate China's import regulations in your planning.