● "I will exclude the white list" ... What's the situation now?

As Japan's export regulations continue, additional measures such as excluding whitelists are expected. Japan has already said on the 12th that bilateral talks between the two countries will exclude Korea from the non-compensation friendly countries. I will exclude you from the so-called 'white list'. Currently, Japan has 27 countries including the United States, Britain, France, and Germany, including Korea, where exports are tightened in almost all industries. It is necessary to obtain individual export licenses for all strategic items as well as semiconductors.

According to the analysis of the Japan Export Control List of the Ministry of Economy, Trade and Industry, the Strategic Material Management Agency said that about 1,100 items including high-tech materials, electronics, communications, sensors and navigation devices would be regulated Estimated. In the latest report, Kim Gyu-pyo, the director of the Korea Institute for International Economic Policy, said, "The exclusion of whitelists is a condition in which uncertainties are amplified because the regulations on these items are very comprehensive and arbitrary," he said. Possible advanced materials (chemicals) and electronic parts (secondary ion batteries for automobiles) are likely to be included, and some machine tools are likely to be included. "

Here's the current schedule: Japan has already announced an amendment to the Export Trade Control Order under the Foreign Exchange and Foreign Trade Control Act (Foreign Exchange Control Act) in order to exclude our country from whitelisting. I will announce my opinion after completing the comments until 24th. From 21 days after that, our country is excluded from the whitelist of Japan. If it goes on, Japan will exclude our country from the whitelist on August 22. Experts say there may be additional "threatening decisions" such as this because there is a fairly long time between decisions and implementation.
● Concerns over global value chain shaking beyond Northeast Asia

The Global Value Chain means the global division of labor, where product design, procurement of parts and raw materials, production, distribution, and sales are conducted in multiple countries and regions. In other words, if Japan, which has strong basic science, sells materials and parts, Korea and Taiwan manufacture and export semiconductors with these materials, and China, Japan and the US are making IT finished products. The global division of labor is a global value chain in which many countries produce and sell mutually advantageous products in terms of technology, resources and costs. This was also the key to expanding world trade by creating effective added value over the last few decades.

This value chain has been active in three Northeast Asian countries, namely Korea, China, and Japan. Japan, China, and Japan, which have a geographically and historically complex relationship, are closely related to each other economically. The industrial value chain is naturally formed between the technical advantages, labor costs, resources, etc., by naturally choosing the advantageous parts according to the comparative advantage of each country. The roles that each has played are as follows.

"Japan has a comparative advantage in the equipment, materials and component technology of manufacturing equipment for IT, high-tech industries, marine and aviation, nuclear power, etc. Korea imports materials, components and manufacturing equipment mainly from Japan, , And chemicals, etc. China is focusing more on importing intermediate goods and capital goods from Japan and Korea, assembling, processing and exporting final goods, based on relatively low labor costs. " Yoon Chang-yong Shinhan Financial Investment Research Institute

If there is a trade dispute between the US and China, that is, the G2, which seems to have been repeatedly sutured and conflicted, the system of division of labor between the three countries will collapse and the Korean economy will suffer a considerable blow. Of course, Japan in the chain of course is also difficult together. Japan is being denied, but the problem is that we can go one step further and shake the global value chain.
● Concerns from each country

The US and Chinese media are also very concerned about this situation. In particular, Bloomberg News on the 22nd was a day of criticism. The title is intense. It is 'the futile trade war of Abe Shinzo against Korea'. "The Japanese leader should not have dragged conventional weapons into political disputes," he said, referring to Japan's export control regulations. I also did not believe it was because of the influx of North Korea from Japan. "The first thing we have to do is to get out of the stupid trade war that Japan has started against its neighboring country," he said. "Abe has won political power over many issues with his victory in the election."

Abe, who has been accused of "applauding abuses" by China and Trump, said that Abe is "particularly hypocritical as a leader who has been applauded for respecting the strengthening of global trade order so far," Bloomberg said. I also criticized it. He also said that Japan 's hitting blow as a boomer of export regulation will not be enough to make Abe' s defamation. Some of his customers say Japanese exporters will lose market and confidence if they find alternative supply points. If we do not stop here and continue the process of excluding Korea from the whitelist, Korea will surely retaliate against it. We fear that if the tensions increase, it will shake up the security relations base. "
● A word from a global competitor ... TSMC Concerns

However, it was not the press editorial or the prospect of a famous economic expert who became very concerned about the actual market in terms of the value chain problem. TSMC's earnings forecast for Taiwan, a strong global competitor of Korea Semiconductor. TSMC is the only company in the global foundry, the semiconductor commissioning business, ahead of Samsung Electronics. Sales in the second quarter were good. And 3Q sales guidance was solid compared to concerns. We continued to provide foundry services to Huawei, and the demand for 5G industry development steadily increased. It was a situation that could lead to expectations that the world semiconductor industry would turn around. In addition, there was a prediction that Korean semiconductor companies with a large share of the world could suffer difficulties due to Japanese regulations, and that they would not expect profits in return.

But TSMC's fourth-quarter outlook was not. Although we may be able to grow compared to the third quarter, we are confident that the uncertainty surrounding the Korea-Japan trade conflict is quite significant. Why? This part was not dealt with deeply in the press, but there was the following entanglement. TSMC was not just a competitor of Samsung Electronics and SK Hynix. Some of them were in the value chain together. TSMC will deliver certain mobile packages to US Apple. To do this, TSMC receives mobile DRAM packages through Samsung Electronics and SK Hynix in Korea. And this is put on the Mobile Application Processor (AP), a semiconductor chipset used for smartphones and tablet PCs. In the industry, the so-called "package-on-a-package" (Pop) method is a simple way to create separate chips rather than a single chip. Anyway, in terms of TSMC, which has been delivering with such a structure, the difficult situation of Korean semiconductors can not be welcomed. And the longer we are prolonged, the more likely this situation is going to be happening all over the place, and eventually the problem will expand explosively in the global value chain.

Even in this situation, it is reported that Japan has held a briefing session for embassy officials in each country that is in charge of export control of semiconductors, display materials, etc., to Korea, before the big public opinion. It is said that export regulation is a measure of export control system rather than countermeasure (retaliation) against compulsory dismissal judgment. If Japan's intention really is such a concession, will Japan really have a serious negative impact on the global value chain, and is it really prepared to take on the world of criticism? As of the 23rd, there is still zero approval from the Japanese government for Japanese export control items.

(Photo = Getty Images Korea)