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Milwaukee Electronics Newsletter Q4 2019
Due to a recent US Supreme Court decision, sales tax rules on interstate commerce are changing. This means that very soon Milwaukee Electronics, including divisions Screaming Circuits, San Diego PCB Design and Automation Controls Group, will need to collect sales tax on all shipments into US states that we are registered to collect tax in. This impacts sales conducted over the Internet as well as non-Internet business. It impacts products we manufacture and services we provide. Organizations that are exempt from payment of sales tax will need to present proof of exemption.
Prior to this ruling, anyone in states that levy a sales tax was responsible for reaching out to their state and paying any sales tax liability directly unless Milwaukee Electronics had some form of physical presence in the state (for example, our Screaming Circuits division has been collecting California state sales tax for a while now due to the presence of California based sales reps).
The US Supreme Court ruling has already taken effect, and that effect is that individual states are able to define their own economic nexus based on a specified level of business activity.
As a result of the Supreme Court decision, individual states can now set their own definitions of economic nexus. We at Milwaukee Electronics, and divisions, are responsible for collecting taxes in states where we meet or exceed the economic nexus threshold. This applies to any business transaction with product shipping or services provided to those states, and the tax and liability is based on the shipping destination. None of this applies if your order is shipped to destinations outside the USA.
If you are exempt from paying sales tax, you can provide an exemption certificate from your state(s). Customers working with our Milwaukee, Tecate, San Diego and ACG branches, please send certificates to “AR.Milwaukee@MilwaukeeElectronics.com” Portland EMS customers, please send certificates to “AR.Portland@MilwaukeeElectronics.com.” Use the email subject line: “Tax Exemption Certificate.”
The short of it:
You can read all 40 pages of the Supreme Court ruling here: https://www.supremecourt.gov/opinions/17pdf/17-494_j4el.pdf
Please note that we can not give legal advice on this matter nor can we help you acquire the certificate from your state(s). If you have more questions about how this affects doing business with us, please contact your program manager or customer service representative.
It can be rather complicated. The sales tax exemption and charge is based on where the boards are shipped. For example, if you live in Seattle, Washington and have the assembled boards delivered to yourself, you will need to have an exemption certificate from Washington state or pay sales tax at Seattle, Washington rates. (The rate calculation goes down to the zip code in many cases) If you live anywhere else, like Oregon, and have your boards shipped to Seattle, Washington, you will pay Seattle tax or need a Washington exemption certificate. If you ship to multiple states, you may need an exemption certificate for each state.
For services such as DFM, design or layout provided by our San Diego PCB Design or our Innovation Design Group, there are a handful of states that tax services. If you are located in Hawaii, South Dakota, New Mexico or West Virginia, you will need to provide a tax exemption certificate, or we may have to add sales tax to the invoice.
Oregon, Montana, Alaska, New Hampshire, and Delaware do not currently have a state tax so if your boards are being shipped into one of those states, you are in the sales-tax clear at this moment. No tax will be collected and no exemption certificate will be needed for shipments into those states. If anything changes with these sates, we will let you know.
This court ruling covers more than just the Internet. While our Screaming Circuits division business is largely conducted through an e-commerce website, a good portion of it takes place in the realm of phones and email. These tax changes cover all of both online and offline transactions.
We don’t have an exact implementation schedule yet, but it will happen within the next few months. We are collecting the exemption certificates now, so if you have or can get one, please do so as soon as possible and email it to us at the address listed above.
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As we pass though the last month of Summer, Milwaukee Electronics shares a valuable market review. While the supply chains of electronic manufacturers around the world are challenged by the impacts of component shortages, allocation, capacity & lead time issues; there are signs of stability, recovery and growth.
MLCCs
Multilayer Ceramic Capacitor (MLCC) inventory is beginning to build up, possibly due to over-ordering in the marketplace by end users and distributors. Several key distributors are now holding stock on lines that have been on allocation over the past 18 months. The problem of allocation has not resolved itself fully, but it is becoming a less critical issue as the market improves and smaller case sizes become more readily available. Larger case sizes are still problematic, in part due to TDK and Murata obsoleting a large proportion of their MLCC catalog (over 241,000 and 9,000 product lines respectively).
Sales and Acquisitions
Infineon is set to acquire semiconductor company Cypress. This will allow them to compete in the Electric Vehicle (EV) market and become a significant chip-maker in the global market. The deal is set to be completed by early 2020.
Marvell have sold their wireless and Bluetooth business to NXP for $1.76 billion which is set to complete by Q1 2020.
GlobalFoundries have agreed on the sale of their New York based 300mm fab to ON Semiconductor for $430 million. ON Semi will gain full operational control of the fab by the end of 2022, with GlobalFoundries manufacturing 300mm wafers on site until handover is completed.
Capacity and lead-time issues
There is a global shortage of Silicon Carbide (SiC) due to a limited number of vendors being able to produce the wafers. ST Microelectronics is strategically investing to ensure they have a supply chain that will be able to support the growing use of SiC in high power/high efficiency needed in consumer markets such as EV’s and the Internet of Things (IoT).
TDK and KOA have closed their order books whilst they battle to ensure continuity of supply to their customers with MLCC’s and commodity resistors. This is the same response as Murata, Rohm (resistor networks) and Vishay (passives).
Please read our latest Milwaukee Electronics Newsletter, which includes:
Please read our latest Milwaukee Electronics Newsletter, which includes:
Please read our latest newsletter for Milwaukee Electronics, which includes:
Milwaukee Electronics’ Portland facility has completed its audit for the transition to ISO 13485:2016 and re-certification to ISO 9001:2015.
“Our internal team did a great job in supporting the transition to latest revision of ISO 13485. While the preparation done last year for the transition to ISO 9001:2015 helped, the two standards are no longer as closely aligned so there was still a significant level of effort required to ensure compliance with the standard’s requirements,” said Bob Willenbring, Milwaukee Electronics’ Corporate Quality Director.
The Portland facility was audited early in October and recommended for certification. There were three minor findings which have been corrected and will be submitted to the facility’s Registrar shortly.
The transition to the new standard more closely aligns the facility’s processes with FDA requirements in the areas of complaint handling, process validation and risk management.
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