SIA Applauds Agreement on Tariffs; Duties Eliminated on Multi-Chip Package Semiconductors.

SAN JOSE, Calif. -- The Semiconductor Industry Association (SIA) applauded today's announcement by Ambassador Portman of an agreement to eliminate duties on multi-chip package (MCP) integrated circuits -- a semiconductor device that includes more than one silicon chip inside the package.

The draft Agreement on Duty-Free Treatment of Multi-Chip Integrated Circuits was finalized at the Governments/Authorities Meeting on Semiconductors (GAMS) in Seoul, Korea.

The draft agreement was finalized by representatives of the governments and authorities from the United States, Korea, Japan, Chinese Taipei and the European Commission, who will now return home to complete their respective approval processes. It is foreseen that the GAMS members will eliminate duties on multi-chip package integrated circuits beginning on January 1, 2006.

"This is a major step forward in our effort to eliminate tariffs on multi-chip packages and lower costs of semiconductor technology for consumers around the world," said George Scalise, president of the SIA. "Ambassador Rob Portman and his team at USTR deserve our appreciation and applause for their persistence in pursuing this agreement. MCPs are a new, fast-growing product -- cutting tariffs to zero on this product is vital to ensure continued growth."

Semiconductors are covered by the Information Technology Agreement (ITA) and thus are duty-free in much of the world. However, an evolution in the packaging of certain semiconductor devices allowed for the inclusion of more than one silicon chip inside each package. This technological advance resulted in a classification of MCPs by customs authorities into a category that was no longer duty-free. As a result of the reclassification, the U.S., Korea, and European Union imposed duties on these semiconductor products. The U.S. has not imposed duties on any semiconductor devices since the mid-1980s. The U.S. and Korean duty on MCPs is 2.6 percent, and the EU duty ranges up to almost 4 percent. MCPs are found in a variety of products including cell phones and personal digital assistants.

The worldwide market for MCPs grew from zero five years ago to $4.2 billion in 2004. The market is expected to nearly double to $7.92B by 2008, with a compounded annual growth rate of 25 percent, which significantly outpaces the growth rate in the rest of the industry.

About SIA

The SIA is the leading voice for the semiconductor industry and has represented U.S. semiconductor companies since 1977. Collectively, the chip industry employs a domestic workforce of 225,000 people. More information about the SIA can be found at www.sia-online.org.