Korea IT H/W: Implications Of Japan's Whitelist Removal Of Korea

Aug. 06, 2019 4:36 AM ETSHECF, SUOPY, SSNLF6 Comments


  • Japan removed South Korea from its trade whitelist on August 2 following its July 4 restriction on exports of three key semiconductor materials.
  • Despite Korea’s removal from the whitelist, Japanese firms exporting to Korean IT H/W companies can still obtain special comprehensive permits using the Compliance Program.
  • The impact on Korea’s production of memory semiconductors and display to be insignificant; Maintain Overweight.

Korea can still obtain comprehensive permits via Compliance Program

Japan removed South Korea from its trade whitelist on August 2 after it decided on July 4 to ask for individual licenses for the exports of three materials (EUV photoresist, hydrogen fluoride, fluorinated polyimides). As a result, the export items classified as strategic items will be required to obtain individual permits (takes up to 90 days, renewed every six months, three or more application documents are required) instead of comprehensive permits (takes one week, renewed every three years, two application documents). Non-strategic materials that can be used for military purposes will be subject to a “catch-all” system. This will likely increase the inventory costs of affected companies and raise uncertainties that a production line could come to a stop if permits are not allowed within three months. However, we note that Korea was the only country in Asia that was on the whitelist. Not even those heavy producers of semiconductors and electronic devices in the region, such as China, Taiwan, and Singapore, enjoyed the whitelist status, not to mention Thailand, Malaysia, and the Philippines where Japan has many production facilities. However, none of these countries have had their production interrupted because of delayed imports from Japan. Why? Because Japanese companies that have established a Compliance Program (CP, or ICT, short for Internal Compliance Program) are granted special comprehensive permits, meaning they can export their products through a swift approval process which is practically the same as the benefits enjoyed by the whitelist countries.



Currently, 632 Japanese companies have established the CP, according to Japan’s Ministry of Economy, Trade and Industry; when including the other CP firms that are undisclosed for a variety of reasons, the number of CP companies totals around 1,300. Shin-Etsu Chemical (OTCPK:SHECF) and SUMCO (OTCPK:SUOPY

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HYUNDAI MOTOR SECURITIES Co., Ltd. is the investment banking arm of the Hyundai Motor Group. It is a Korea-based company specialized in the provision of securities and financial services. The Company mainly engages in the securities dealing and brokerage businesses, covering stocks, futures, options, government bonds, corporate bonds, foreign exchanges and financial derivative products. It also engages in the provision of investment consulting services, Internet banking services, corporate financing services, corporate analysis services, as well as operation of trust business.

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