What’s the Difference Between COO, COD, and COA for Semiconductors?

Article Highlights:

• Businesses that understand COO, COD, COA—as well as the differences between them—can actively work to obtain that information from direct manufacturers and other supply chain stakeholders, giving them the intelligence they need to mitigate trade costs.
• In today’s trade landscape, it’s absolutely critical for original equipment manufacturers (OEMs) and other importers to understand the COOs of their parts. Businesses that have mapped their full tier one supply chain to manufacturers and countries of origin know their full tariff responsibility, and what parts are costing them the most to import to the U.S.
• As legal precedent continues to move toward recognizing the country of diffusion as the official country of origin for chips, COD will become the equivalent of COO for semiconductor manufacturing. This is a consequential development for companies in industries ranging from technology to automotive to aerospace and defense. 

The second Trump administration has made significant waves in the global trade landscape. By establishing an aggressive tariff regime and implementing import levies on millions of products from all over the world, the U.S. has forced American importers—and their international suppliers—to pay very close attention to a number of key aspects of their supply chains. Organizations are now arguably more attuned than ever to manufacturing locations, harmonized tariff schedule (HTS) codes, country of origin (COO), and country of diffusion (COD).

These terms are as consequential as they are today because they function as official designations for Customs and Border Protection (CBP) and the U.S. government—designations that carry specific financial responsibilities. The country of origin for an imported zener diode, for example, is now a critical detail because of the substantial tariff rates the Trump administration has imposed on countries operating in the global semiconductor supply chain. Businesses that understand COO, COD, COA—as well as the differences between them—can actively work to obtain that information from direct manufacturers and other supply chain stakeholders, giving them the intelligence they need to mitigate trade costs. In addition, companies that are conversant in these terms can incorporate them into overarching business strategies, giving them the opportunity to modify, tweak, and “engineer” larger swaths of their supply chains in the months and years to come. 

What Is Country of Origin (COO)?

A term that has gained a great deal of importance during the second Trump administration, country of origin (COO) refers to the country where a product, part, or subassembly was manufactured or produced. In part because of the criticality of the term to the U.S. government, the U.S. federal code includes an official definition of the term: “‘Country of origin’ means the country of manufacture, production, or growth of any article of foreign origin entering the United States.”

Many products today are manufactured in multiple locations, including two or more countries. In these instances, the U.S. government uses the principle of substantial transformation to determine the COO. According to this principle, the country of origin for an imported good is the country where the last “substantial transformation” took place. As federal code explains, “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 this part.” 

It’s also worth noting that “substantial transformation” is not an arbitrary term, either, and there’s a strict threshold for meeting it. As the International Trade Administration lays out, “Substantial transformation means that the good underwent a fundamental change in form, appearance, nature, or character.” This fundamental change, further, “adds to the good’s value at an amount or percentage that is significant, compared to the value which the good (or its components or materials) had when exported from the country where it was first made or grown.”

How Knowing COO Can Benefit Your Business

In today’s trade landscape, it’s absolutely critical for original equipment manufacturers (OEMs) and other importers to understand the COOs of their parts. Businesses that have mapped their full tier one supply chain to manufacturers and countries of origin know their full tariff responsibility, and what parts are costing them the most to import to the U.S. This information allows organizations to build resilience through strategic measures aimed at lowering tariff responsibilities, reducing country dependencies, and fostering a supply chain more fully adapted to 2025. 

Companies that don’t know where their parts are coming from, on the other hand, lack the foundational intelligence to make the kind of surgical changes to sourcing and suppliers that can help businesses lower costs and bolster stability over the longer term.

Companies that don’t know where their parts are coming from, on the other hand, lack the foundational intelligence to make the kind of surgical changes to sourcing and suppliers that can help businesses lower costs and bolster stability over the longer term.

• Lower Tariff Responsibility
• Reduce Country Dependencies
• Pursue Tariff Engineering
• Evaluate Future Tariff and Geopolitical Risk Exposure

What Is Country of Diffusion (COD)?

As anyone who works in the electronic supply chain knows, semiconductor manufacturing is a highly complex process. Because of the layers and intricacy that go into making chips, semiconductors are an ideal example of a product that’s often manufactured in multiple countries. One of the first key steps in this sophisticated operation is known as “diffusion.” According to the Computer Glossary, diffusion is a “semiconductor manufacturing process that infuses tiny quantities of impurities into a base material, such as silicon, to change its electrical characteristics.” In simpler terms, the country of diffusion can be understood as the country where the wafer was originally fabricated. 

Historically, the country of origin, or COO, of an imported semiconductor was determined based on its country of assembly. But over the past few years, this precedent has gradually shifted toward the country of diffusion. Now, the COO of many imported semiconductors is based on the country where the diffusion process took place. Suffice it to say, this change has major ramifications for importers, who are now paying tariffs and other import levies based on a whole different set of manufacturing nations. 

How Knowing COD Can Benefit Your Business

As with COO, knowing the COD of imported semiconductors can help businesses gain a more comprehensive understanding of their supply chain, tariff responsibilities, and related cost-saving opportunities. As legal precedent continues to move toward recognizing the country of diffusion as the official country of origin for chips, COD will become the equivalent of COO for semiconductor manufacturing. This is a consequential development for companies in industries ranging from technology to automotive to aerospace and defense. It also heightens the importance of having COD information for all imported parts. 

• Modify Semiconductor Supply Chain
• Lower Tariff Responsibility
• Pursue Tariff Engineering
• Work With Suppliers to Adapt to Tariff Landscape

What Is Country of Assembly (COA)?

While the country of diffusion is where the wafer that’s ultimately used to make a semiconductor is fabricated, the country of assembly is where the back-end manufacturing—including packaging and IC assembly—takes place. As discussed earlier, the COA has long served as the de facto country of origin for semiconductors, as governments used the principle of substantial transformation to determine that assembly and packaging represented a “fundamental change in form,” one that added significantly to a chip’s value. 

How Knowing COA Can Benefit Your Business

While COD is emerging as the new standard for a semiconductor’s country of origin, the transition away from country of assembly is not complete. In certain cases, this state of flux leaves a degree of flexibility in how semiconductor COOs are classified. Savvy OEMs with comprehensive visibility into the COO, COD, and COA of their chips may be able to use that knowledge to their advantage during the importation process. 

• Pursue Tariff Engineering Using COA/COD Information
• Modify Semiconductor Supply Chain
• Lower Tariff Responsibility

What Is Country of Design?

Although not a term crucial to trade classifications and tariffs, country of design can be an important part of how businesses grasp the full sweep of their semiconductor manufacturing supply chain. While wafers are fabricated in the country of diffusion, and chips are assembled and packaged in the country of assembly, every semiconductor is also designed in a specific geographical location. Generally, the country where the chip manufacturer is headquartered is a safe bet to be the country of design. For example, while Nvidia chips are primarily fabricated in Taiwan and assembled and packaged in various Asian countries, they are all designed in the U.S. (Nvidia is headquartered in Santa Clara, California). 

How Knowing Country of Design Can Benefit Your Business

Knowing where a country is designed does not provide the same immediate benefit as the COO, the COD, or even the COA. It does, however, give OEMs an opportunity to think strategically about the chipmaker and how they might work with them to make advantageous supply chain modifications in the years to come. Businesses who serve as major customers to U.S. chipmakers that outsource their fabrication to Taiwan, South Korea, or China, for example, may want to broach conversations with their suppliers about potentially onshoring some of their semiconductor manufacturing in the years to come. Given the current tariff landscape, moving fabrication to the U.S. can make a substantial difference—not only in terms of immediate tariff costs, but also for supply chain stability and broader insulation from geopolitical tensions. 

Businesses who serve as major customers to U.S. chipmakers that outsource their fabrication to Taiwan, South Korea, or China, for example, may want to broach conversations with their suppliers about potentially onshoring some of their semiconductor manufacturing in the years to come.ountry of origin

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• Learn Which Suppliers Have Manufacturing/Fabrication Flexibility
• Start Conversations with Chipmakers About Onshoring Manufacturing
• Develop Strategies for Onshoring or Nearshoring Semiconductor Manufacturing 

How Z2Data Gives Full COO/COD/COA Visibility

If the COVID-19 pandemic underscored the importance of supply chain visibility—knowing your direct and sub-tier manufacturers—the 2025 trade regime established by the Trump administration has only reinforced the value of this intelligence. And given today’s dramatic differences in tariff rates from one country to the next, the past year has also highlighted the importance of designations like COO, COD, and COA. Companies that develop a firm grasp of their semiconductor manufacturing landscape and its tariff implications are in a significantly stronger position to make advantageous changes to their sourcing. These proactive mitigation measures include developing tariff engineering strategies, fostering optionality throughout supply chains, and pursuing conversations with suppliers about reducing tariff exposure. 

Organizations looking to expand supply chain resilience and tamp down trade costs can benefit from the capabilities offered by supply chain risk management (SCRM) platforms like Z2Data. Z2Data provides multitier supply chain visibility, as well as part-to-site mapping that traces individual components back to manufacturing sites all over the world. Better still, the SCRM firm’s databases often show multiple COOs for a single part, giving customers the coveted optionality key to starting conversations with manufacturers about tweaking sourcing to lower tariff rates. With the capabilities offered by Z2Data, OEMs and other businesses have access to the data, visibility, and analytics crucial to making effective changes to supply chains. 

To learn more about Z2Data and how its COO, COD, and COA insights can help your organization understand its tariff exposure, schedule a free trial with one of our product experts.