Site finished or prefinished? What is the raw material? Is it shiplap, S4S, T&G, or what pattern? What product was used (brand and type)? How was the wood prepper? All six sides finished? Was the wood kiln dried or green? Wider shot showing the whole house? Is this confined to one area or scattered randomly?

I'll try my best here but i have limited info. It's smooth cedar (but arrived wire brushed), shiplap, I used a company in Utah but noticed the plank stamped w "Bennett". Googled and they are in Idaho, not sure how it was dried but asking builder. Clear Mixed Grain is pattern. I believe all 6 sides finished. I read it has to be acclimated before installation but my builder said it acclimated while in transport (? strange). It's all over the house.

"but my builder said it acclimated while in transport (? strange)"

Very much so as it is completely incorrect. What area of the country are you in? Site finished then? What is the brand and type of finish? Primer used?

Is this paint or stain? If its stain, what type of stain. Semi transparent, or solid color? Stain should soak into the wood. This looks almost like paint put on top of the wood. Also, I know it is supposed to be cedar, but, that really does not look like cedar.

@millworkman. I believe it was sourced in Idaho (and I"m guessing that bc i see the supplier's name on the side of piece of wood). Transported to Utah. It was not site finished. Pre-finished. I dont know where they stained it but guessing in Idaho? I doubt they will give me the finish brand but i could ask. I already asked builder if primer was used. Hope to hear back.

@cat_ky It's def not paint. It looks like paint which is why that was first question I asked. What you say scares me about it not being cedar. maybe it's just poor quality cedar. But i agree - there is no "soak through". I'll ask if it was semi transparent or solid stain

Looks like a solid stain but since they finished it this should be on them provided it was installed properly. The instructions did not require you to top coat it in the field for the full warranty did it by chance? What did their warranty state for remediation if the finish fails? The described remediation in your original post may be their only process. Bennet appears to be a lumber mill so it was most likely purchased thru a distributor who worked with a finisher for the staining process. And they may tell you what was used and or it should be on the invoice.

You do not use primer with stain. Only with paint. Stain is meant to soak into the wood. Primer would not allow it to do that. If the stain is solid color, then sometimes primer is used first. Solid color stain is actually more like a paint.

Solid color stain, water based, also peels like paint too. Ask me how I know...I told my husband to get oil based but he said he knows better.

What kind of stain was used?

@cat_ky, did not see this until now but you certainly do use primer beneath solid color stains. Here is a link to the Cabot product.