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Cablegate: Extrancheck: Post Shipment Verification: Ambit Microsystems

VZCZCXYZ0005
RR RUEHWEB

DE RUEHHK #2204 2350900
ZNR UUUUU ZZH
R 230900Z AUG 07
FM AMCONSUL HONG KONG
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 2695

UNCLAS HONG KONG 002204

SIPDIS

USDOC FOR 532/OEA/LHINES/DFARROW
USDOC FOR 3132 FOR FCS/OIO REGIONAL DIRECTOR WILLIAM ZARIT
BICE FOR OFFICE OF STRATEGIC INVESTIGATIONS

BEIJING FOR FCS JEANETTE CHU

SIPDIS

E.O. 12958: N/A
TAGS: BMGT BEXP HK ETRD ETTC
SUBJECT: EXTRANCHECK: POST SHIPMENT VERIFICATION: AMBIT MICROSYSTEMS
(ZHONG SHAN)

REF: A) USDOC 05155 B) HK 04113

1.Unauthorized disclosure of the information provided below is
prohibited by Section 12C of the Export Administration Act.

2. As per reftel A request and at the direction of the Office of
Enforcement Analysis (OEA) of the USDOC Bureau of Industry and
Security (BIS), Export Control Officer Philip Ankel (ECO) attempted
to conduct a post shipment-verification at Ambit Microsystems
(Zhongshan), C/O Soonest Express, 4th Floor, Unit 4008-4018E, ATL
Logistics Centre B, Berth 3 Kwai Chung Container Terminals, Kwai
Chung, New Territories, Hong Kong (Ambit). The items in question
are various semiconductors exported to Ambit on or about April 24,
2007 and valued at USD 137,000. On the applicable shippers export
declaration (SED), these items are classified as 3A001 and, if
properly classified, would be controlled for national security (NS)
reasons. The exporter was Triquint Semiconductor (Triquint) of
Hillsboro Oregon.

3. According to the Hong Kong Companies Registry, Ambit
Microsystems is not registered in Hong Kong. A company with a
similar name, Ambit Broadband Co. Limited was established in
September of 2006. Taiwanese passport holders Chu, Hsien Sheng and
Lin, Yuan Hao are listed as directors. That company has nominal
issue share capital (USD 1,000) but no paid-up share capital.
Soonest Express (Soonest) is a Hong Kong freight forwarder
previously referenced in Reftel B.

4. As in the case referenced in Reftel B, ECO attempted to obtain
information about the shipment by contacting Soonest. Soonest
requested a tracking number for the shipment so that it could
retrieve the applicable documentation. ECO was unable to obtain
such a tracking number from OEA and so did not obtain additional
information from Soonest. Nonetheless, from the documentation OEA
provided (including Triquint invoices and shipping documents), it is
very likely that the items in question transshipped Hong Kong on
their way to Ambit's production facility in Zhongshan, Guangdong,
mainland China.

5. Ambit is a subsidiary of FOXCONN (www.foxconn.com), which is a
leading manufacturer of computer components including motherboards
as well as various electronic components for consumer goods
including mobile phone handsets and notebook computers. FOXCONN
supplies components for leading U.S. companies including Apple
Computers, Invidia, etc. FOXCONN is a Taiwanese company with a
significant China presence (more than 20 locations throughout
China), and is the registered trade name of Hon Hai Precision
Industry Group. FOXCONN acquired Ambit in 2004. One of FOXCONN's
facilities in mainland China was the subject of a favorable PSV by
Beijing ECO on June 7, 2007 (reference BIS license D368885).

6. The ECO notes that in certain circumstances, items that fall
into the applicable ECCN (3A001) may be exported or reexported to
mainland China without a license, particularly where they are
destined for civil use. However, in other circumstances, 3A001
items require a license to mainland China regardless of end-use.
This difference is dependant on the ECCN subcategory into which the
applicable items fall. While the ECCN subcategory was not included
in Triquint's Shippers Export Declaration (SED), Triquint's invoice
states that some of the items in question are classified under ECCN
3A001.c.2. This subcategory does not appear to require a license if
exported to Hong Kong but would appear to require a license if
exported/reexported to mainland China. The ECO recommends that BIS
conduct a commodity classification for these items to conclusively
determine their control status. Nonetheless, in light of the
apparent violation of licensing requirements for these items based
on Triquint's own commodity classification, the ECO recommends that
this check be classified as Unfavorable.

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