MEM Opportunities in Korea - Focus Report - Switzerland Global Enterprise

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MEM Opportunities in Korea - Focus Report - Switzerland Global Enterprise
Focus Report

MEM Opportunities in Korea

  OFFICIAL PROGRAM   IN COLLABORATION WITH
MEM Opportunities in Korea
                                                                                 Date: May 14, 2020
                                                                                 Language: English
                                                                                 Number of pages: 71
                                                                                 Author: Global Business Consultant Coop (Korea)
                                                                                 Other sectoral reports: Are you interested in reports for other
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       OFFICIAL PROGRAM               IN COLLABORATION WITH

DISCLAIMER
The information in this report was gathered and researched from sources
believed to be reliable and are written in good faith. Switzerland Global
Enterprise and its network partners cannot be held liable for data which might
not be complete, accurate or up-to-date; nor for data from internet
pages/sources over which Switzerland Global Enterprise and its network
partners have no influence. The information in this report has no legal or
juridical character unless specifically noted.
Contents
                                                            vacuum pumps, hand- or foot-operated
                                                            air pumps, compressors for refrigerating
                                                            equipment and air compressors mounted
1.     EXECUTIVE SUMMARY _________ 5                        on a wheeled chassis for towing)) ___ 56
                                                     4.6    841490 (Parts of : air or vacuum pumps,
2.     INDUSTRY OVERVIEW __________ 7
                                                            air or other gas compressors, fans and
2.1      MPE Industry in Korea ____________7
                                                            ventilating or recycling hoods
2.2      Korea-Japan Trade conflict and korea’s
                                                            incorporating a fan, n.e.s ) ________ 57
         actions ______________________ 8
                                                     4.7    841981 (Machinery, plant and equipment
2.3      Korea’s Export/Import Trends of MPE
                                                            for making hot drinks or for cooking or
         Items _______________________ 9
                                                            heating food (excluding domestic
3.     KEY ITEMS __________________ 14                      appliances) __________________ 57
3.1.     Group I _____________________ 14            4.8    841989 (Machinery, plant or laboratory
3.2.     Group II _____________________ 25                  equipment, whether or not electrically
3.3.     Group III ____________________ 34                  heated, for the treatment of materials by
3.4.     Group IV ____________________40                    a process involving a change of
                                                            temperature such as heating, cooking,
4.     NON-KEY ITEMS ______________ 51
                                                            roasting, sterilising, pasteurising,
4.1      8409 (Parts suitable for use solely or
                                                            steaming, evaporating, vaporising,
         principally with the engines of heading
                                                            condensing or cooling, n.e.s. (excluding
         84.07 or 84.08) ________________ 52
                                                            machinery used for domestic purposes
4.2      8411 (Turbo-jets, turbo-propellers and
                                                            and furnaces, ovens and other equipment
         other gas turbines ) _____________ 53
                                                            of heading 8514) ______________ 58
4.3      841370 (Centrifugal pumps, power-
                                                     4.9    8456 (Machine-tools for working any
         driven (excluding those of subheading
                                                            material by removal of material, by laser
         8413.11 and 8413.19, fuel, lubricating or
                                                            or other light or photon beam, ultrasonic,
         cooling medium pumps for internal
                                                            electro-discharge, electro-chemical,
         combustion piston engine and concrete
                                                            electron beam, ionic-beam or plasma arc
         pumps) ) ____________________ 54
                                                            processes; water-jet cutting machines) 59
4.4      841410 (Vacuum pumps) _________ 55
                                                     4.10   8457 (Machining centres, unit
4.5      841480 (Air pumps, air or other gas
                                                            construction machines (single station)
         compressors and ventilating or recycling
                                                            and multi station transfer machines, for
         hoods incorporating a fan, whether or not
                                                            working metal ) _______________ 60
         fitted with filters, having a maximum
                                                     4.11   8460 (Machine-tools for deburring,
         horizontal side > 120 cm (excluding
                                                            sharpening, grinding, honing, lapping,
polishing or otherwise finishing metal or     4.16     848340 (Gears and gearing, other than
          cermets by means of grinding stones,                   toothed wheels, chain sprockets and
          abrasives or polishing products, other                 other transmission elements presented
          than gear cutting, gear or gear finishing              separately; ball or roller screws; gear
          machines of heading 84.61 ) _______ 61                 boxes and other speed changers,
4.12      8461(Machine-tools for planing, shaping,               including torque converters) ______ 66
          slotting, broaching, gear cutting, gear       4.17     848610(Machines and apparatus for the
          grinding or gear finishing, sawing,                    manufacture of boules or wafers) ___ 66
          cutting-off and other machine-tools           4.18     850110 (Motors of an output not
          working by removing metal or cermets,                  exceeding 37.5 W) _____________ 67
          not elsewhere specified or included ) _ 62    4.19     850131 (DC motors of an output > 37,5 W
4.13      8462 (Machine-tools (including presses)                but
1. Executive Summary

The MEM industry in Korea is going through a period of great changes. Those are triggered by mainly three factors:

     a)   The ongoing and deepening trade conflict between Korea and Japan, resulting in strict policy measures by the Korean
          government.
     b)   A strong drive of the Korean industry to diversify their supply chains and to reduce the dependence from Japanese
          MEM products
     c)   The impact of the current Covid-19 crisis

All three factors generate important new market opportunities for Swiss MEM manufacturers. Factors a) and b) will lead to a
loss of market share by Japanese manufacturers. This report indicates where Swiss producers can gain from the demise of their
Japanese competitors.

The effects of factor c) are less predictable. Korea weathered the Covid-19 storm quite well and is around 6-8 weeks ahead of
Switzerland. The country did not go into a lockdown and most industrial firms were functioning. However, interrupted supply
chains let to a shortage of parts. MEM market contacts tell us that they are perceiving a clear pattern of reshoring by their
Korean customers. This will lead to an increased demand for machine tools. Obviously, the economic fallout is slowing
consumption and investment and this will likely have an adverse effect on new orders. It is still premature to tell which effect
will be greater.

The trade conflict between Korea and Japan opens a strategic window for Swiss (and other non-Japanese foreign) MEM
producers. Due to Japan’s export controls in August 2019, Korea designated ‘100 strategic items’ that need to be procured from
sources other than Japan and that need to be localized. Among the 100 items, according to priority, 20 have been assigned
target periods of ‘less than 1 year’ and 80 items as ‘less than 5 years.’

This report analyizes trends a) and b) based on hard data (customs statistics) as well as qualitative information received by
market players in Korea.

Chapter 2 (p. 7-13) gives a brief quantitative overview on the industry in Korea.

In chapter 3 and 4 we identified a total of 66 MEM items where Swiss producers stand a fair chance to increase their market
share in Korea. Chapter 3 (p. 14-49) analyses 46 items out of the 100 designated as “strategic” by the Korean government. The
data model applied uses following filters:
     ① Group I: Restricted Items by Japan with an import ratio greater than 50%, of which more than 50% are imported
          from Japan, and of which imports from Japan total more than $10M (13 items)
     ② Group II: Restricted items with an import ratio greater than 50%, of which less than 50% are imported from Japan,
          and of which imports from Japan total more than $30M (12 Items)
     ③ Group III: Restricted items with an import ratio of less than 50% and of which imports from Japan total more than
          $50M
           (7 Items)
     ④ Group IV: Non-restricted items with an import ratio greater than 50%, of which imports from Japan total more than
          $40M, and of which imports are increasing (14 Items)

Chapter 4 of the report (p. 50-68) analyzes 20 additional items not qualified as “strategic” but with a high import rate from
Japan. The model applied here identifies items where Japanese manufacturers are ranked in the top 3 and Swiss imports are
higher that US$ 5 million per year in the last three years.

Chapter 5 provides a short synopsis on the market opportunities by industry breakdown.

MEM OPPORTUNITIES IN KOREA
5
Chapter 6 briefly discusses some market entry and expansion strategies. As those highly depend on the actual market position
and ability of every individual company, they are generic and merely serve as a rough indication as to how the strategic
window could be used to gain market share.

This report serves as an indicator where individual Swiss MEM companies should look for market chances and dig deeper to
identify the opportunities presently occurring in Korea.

Swiss Business Hub Korea and S-GE, together with its industry intelligence partners are happy to do that digging for you. We
are convinced that there are hidden gems to be found. But we have to act rather quickly as we believe that the aforementioned
strategic window will stay open just for the next 2 to 5 years.

Seoul, April 2020

Dr. Roger Zbinden

MEM OPPORTUNITIES IN KOREA
6
2. Industry Overview

2.1 MPE INDUSTRY IN KOREA

MEM refers to the metal, electrical and mechanical industries. In Korea, the relevant industry abbreviation is MPE (materials,
parts, equipment industry). MPE is wider in scope as it also includes the chemicals and textiles industries. However, in this
report we excluded those two industries. For convenience, this report will use ‘MPE’ for the Korean industry and ‘MEM’ for the
Swiss industry.

Korea has been known for its strong economic fundamentals in the manufacturing industry since the 1970s. In the beginning,
Korea started with ‘light manufacturing’ in areas such as textiles, shoes and clothes. Nowadays, its major industries and export
items are semiconductors, automobiles, shipbuilding and displays. As shown below, excluding raw materials (oil and gas), the
MPE industries are major export and import items.

Table 1 Overview on major export & import items in 2018-2019
                                                                                                                   (Unit: million USD)
                             EXPORT (% CAGR)                                                IMPORT (% CAGR)
 Rank
                     ITEM                   2018           2019                    ITEM                  2018             2019
         Electrical appliances and
    1                                      184,588        153,629      Crude oil and Fuel                146,954         127,341
         parts
         Reactor, Boiler and
    2                                      77,651         70,904       Electrical appliances and parts   84,776          89,700
         Machinery
    3    Vehicles                           61,171        62,863       Reactor, Boiler and Machinery     60,192          51,630
                                                                       Optical and Inspection
    4    Mineral fuel and oil              47,989         42,179                                         22,422          18,478
                                                                       equipment
    5    Plastic products                  34,915         32,594       Vehicles                          16,830          16,693

    6    Iron and Steel                    24,746         23,098       Iron and Steel                    16,455           15,678
         Optical and Inspection
    7                                      27,846         20,997       Furnace light,Slag and Ash        14,955          15,094
         equipment
    8    Organic chemicals                 25,339         20,986       Organic chemicals                 14,214          12,694

    9    Ship and Water structures         20,334         18,888       Plastic products                  11,813           11,517

    10   Steel products                    10,488          9,179       Chemical industrial products       8,611           8,164
Note: Semiconductors are included in electrical appliances and parts
Source: Korea Customs Service (2020)

In 2018, Korea’s MPE production volume was US$ 786 billion, which accounted for 52% of the entire manufacturing industry.
Since the special law on ‘Material & Parts Industry Promotion’ was passed in 2001, MPE industries have been provided with
collateral support from the government and private sector entities such as banks. As a result, production volume has increased
year by year.

MEM OPPORTUNITIES IN KOREA
7
The trade volume of MPE has increased by 32.4% CAGR. In 2010, the trade volume was US$ 411 billion and increased to
US$ 544 billion in 2018.

MPE industries are generally related to other industries in that they provide opportunities for more added value and
continuous improvement. In particular, the Industry 4.0 initiative which embraces areas such as renewable energy, smart
factories, AI, and technology conversion, needs to adopt small, lightweight, and digital convergence technologies. Thereby,
Korea has focused resources and support into MPE industries to secure core technologies as well as stable sourcing.

Since 2001, Korea MPE industries have grown not qualitatively but quantitatively. This has led to rather giving weight on mass
production of general items and continued trade deficit with Japan. In 2018, MPE items accounted for 68% of total imports
(US$ 54.6 billion) from Japan. The following table presents the top four MPE import countries.

Table 2 Korea's top 4 MPE importing countries by proportion, 2018

                  Country              Japan                  China                   EU                    USA

                      %                  68.0                  53.5                  46.5                   41.2

2.2 KOREA-JAPAN TRADE CONFLICT AND KOREA’S ACTIONS

Japan has imposed a series of export regulations in July 2019 on materials, parts, and equipment required by key
manufacturing industries of Korea such as semiconductors and displays. In August 2019, Japan removed Korea from its white
list of trade partners who are entitled to simplified export control procedures for 1,194 items including precision machinery,
carbon fiber, functional film adhesive etc. Korea thereupon removed Japan from its white list in September 2019.

In order to minimize sourcing risks due to the export curbs as well as the persisting trade deficit with Japan, the government
set the Measures on Strengthening Competitiveness of the Korean MPE industry. With this plan, it designated 100 key items
especially out of Japan’s strategic export items (1,194) and total MPE items (4,708) to raise self-sufficiency and a
diversification of trading partners. These 100 items are categorized in 6 industry fields such as semiconductors, displays,
automobiles, electro/electric, machinery/metal and basic chemicals.

Table 3 100 Key Items - type and no. of items

                                                                                                                       No. of
    Industries concerned                                              Items
                                                                                                                       Items
 Semiconductors               along with other relevant key materials and equipment                                      13

 Displays                     Process chemicals, precision bonded materials                                              11

 Automobiles                  Sensors, automotive parts, lightweight materials (body, parts)                             13

 Electro/Electric             Battery core materials, optical lenses, new materials and electronic parts                 19

 Machinery and metal          Metal processing equipment, high-precision alloys such as a metal powder                   39

 Basic Chemicals              5 types of fluorinated chemical materials and high-precision adhesive materials             5

Two target periods for supply stabilization of the 100 items are set - 20 items shall be diversified within 1 year and 80 items
within 5 years. Imports of these items will be secured from alternative sources such as the United States, China and the
European Union, and tariffs will be lowered to as little as 0% from April 2020. This measure is valid for one year. This

MEM OPPORTUNITIES IN KOREA
8
diversification drive opens the strategic window for Swiss and other foreign MEM producers. Given the current development in
the Korean MPE industry, it is assumed that this trend to higher diversification will be irreversible.

The government plans to inject U$ 6.7 billion over seven years for local substitution and an additional U$ 2.1 billion to
encourage M&As of high-tech companies. Technology transfers and direct investment from abroad will also be supported. For
R&D investment, the budget of this year allocates U$ 21.3 billion, an increase of 17.3% compared to 2019. Local supplies of key
industrial materials and parts that have usually been imported from abroad are put top priority on the R&D investment
support plan.

Another key area of R&D investment is the so-called DNA project, which stands for Data, 5G Network, and Artificial
Intelligence. The budget also targets innovation in the Big-3 industries: biohealth, future smart cars and system
semiconductors.

2.3 KOREA’S EXPORT/IMPORT TRENDS OF MPE ITEMS

The following export and import trend data of the top 30 items within the last three years are crucial to examine for better
understanding the MPE industry. Description on each HS code are detailed in Table 4.

Table 4 Korea's export and import trends of MPE items
                                                                                                             (Unit: US$ thousand, %)
                                           2018                                                2019 (1~11)
    HS Code
                    Export        YoY(%)          Import    YoY(%)        Export         YoY(%)         Import          YoY(%)
 7219             2,453,618     14.2          1,819,539    7.3          2,079,632      -9.4           1,573,854       -7.1
 7326             1,819,553     11.5          1,929,622    6.2          1,681,075      0.2            1,749,584       -1.5
 8409             2,800,589     7.2           1,132,947    0.5          2,929,114      13.4           1,014,358       -2.5
 8414             2,962,407     8.8           2,645,610    0.7          2,742,176      1.4            2,346,770       -5.6
 8419             1,862,185     10.0          1,049,958    -0.5         3,458,708      105.1          978,231         1.7
 8421             1,840,018     23.8          1,540,659    13.7         1,944,398      17.3           1,592,446       13.2
 8471             6,012,483     -4.5          8,267,646    9.8          954,902        -83.5          6,066,660       -20.3
 8473             12,127,696    60.3          4,761,726    55.4         10,478,238     -0.4           5,762,374       41.1
 8479             6,625,908     9.5           2,215,156    -8.7         5,651,742      -6.1           2,113,953       4.1
 8481             2,133,571     9.3           2,431,883    -2.2         1,898,774      -3.0           2,169,422       -2.8
 8486             8,663,315     26.1          16,899,429   -16.9        6,884,095      -14.4          8,206,058       -48.0
 8504             2,124,128     -7.0          2,397,367    -1.0         1,865,198      -4.3           2,280,153       3.3
 8507             7,225,358     21.4          1,552,048    73.8         6,754,224      2.2            1,456,596       4.3
 8517             14,260,947    -8.9          11,896,365   -10.6        16,317,348     28.3           11,925,612      9.6
 8523             2,597,498     214.6         1,413,107    28.7         4,522,463      93.5           1,413,155       10.2
 8529             7,414,565     -9.4          2,244,550    44.7         9,475,732      41.4           4,672,993       141.3
 8534             4,995,647     -9.6          2,228,113    -7.1         4,402,629      -4.7           2,050,680       1.6
 8536             2,893,231     4.1           2,310,210    0.7          2,667,699      -0.1           2,059,321       -3.3
 8541             6,014,560     -2.8          4,657,307    -1.2         4,803,521      -14.3          4,525,865       5.2
 8542             109,776,376   27.5          34,522,862   3.4          73,002,818     -29.0          32,666,721      3.5
 8544             3,262,052     12.3          3,022,652    2.8          2,642,402      -12.0          2,747,036       0.0
 8703             38,248,046    -1.5          11,201,181   15.8         36,899,839     6.3            9,781,199       -4.4

MEM OPPORTUNITIES IN KOREA
9
8708             19,487,805       -0.2            3,877,938       -3.5            17,386,552         -3.3           3,516,452       -1.2
 8901             15,792,882       -34.3           1,474,944       12.2            15,933,545         11.7           978,571         -27.5
 9001             3,844,438        5.4             1,748,112       -4.4            3,570,964          1.2            1,378,642       -13.7
 9013             13,452,494       -13.0           4,103,684       2.3             6,419,785          -49.1          1,188,431       -70.0
 9018             1,794,862        7.2             2,001,331       10.3            1,669,252          2.9            2,006,002       10.7
 9031             3,049,049        0.2             3,304,448       13.2            2,551,995          -8.9           2,245,036       -27.4

Table 5 Description of Items by HS Code

  HS Code                                                                Item Description
 7219           Flat-rolled products of stainless steel, of a width of 600 ㎜ or more.
 7326           Other articles of iron or steel.
 8409           Parts suitable for use solely or principally with the engines of heading 84.07 or 84.08.
                Air or vacuum pumps, air or other gas compressors and fans ventilating or recycling hoods incorporating a fan, whether or
 8414
                not fitted with filters.
                Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other equipment
                of heading 85.14), for the treatment of materials by a process involving a change of temperature such as heating, cooking,
 8419
                roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or cooling,
                other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-electric.
 8421           Centrifuges, including centrifugal dryers filtering or purifying machinery and apparatus, for liquids or gases.
                Automatic data processing machines and units thereof magnetic or optical readers, machines for transcribing data onto data
 8471
                media in coded form and machines for processing such data, not elsewhere specified or included.
                Parts and accessories (other than covers, carrying cases and the like) suitable for use solely or principally with machines of
 8473
                headings 84.69 to 84.72.
 8479           Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter.
                Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, including pressure- reducing valves
 8481
                and thermostatically controlled valves.
                Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or wafers,
 8486           semiconductor devices, electronic integrated circuits or flat panel displays machines and apparatus specified in Note 9 (C) to
                this Chapter; parts and accessories.
 8504           Electrical transformers, static convertors (for example, rectifiers) and inductors.

 8507           Electric accumulators, including separators therefore, whether or not rectangular (including square).

                Telephone sets, including telephones for cellular networks or for other wireless networks other apparatus for
                the transmission or reception of voice, images or other data, including apparatus for communication in a wired
 8517
                or wireless network (such as a local or wide area network), other than transmission or reception apparatus of
                heading 8443, 8525, 8527 or 8528; parts thereof.
                Discs, tapes, solid-state non-volatile storage devices, "smart cards" and other media for the recording of sound
 8523           or of other phenomena, whether or not recorded, including matrices and masters for the production of discs,
                but excluding products of Chapter 37.
 8529           Parts suitable for use solely or principally with the apparatus of headings 85.25 to 85.28.
 8534           Printed circuits.
                Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical
 8536           circuits (for example, switches relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other
                connectors, junction boxes), for a voltage not exceeding 1,000volts; connectors

MEM OPPORTUNITIES IN KOREA
10
Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including
 8541             photovoltaic cells whether or not assembled in modules or made up into panels; light emitting diodes; mounted
                  piezo-electric crystals.
 8542             Electronic integrated circuits.
                  Insulated (including enamelled or anodised) wire, cable (including co-axial cable) and other insulated electric
 8544             conductors whether or not fitted with connectors; optical fibre cables, made up of individually sheathed fibres,
                  whether or not assembled with electric conductors or fitted with connector.
                  Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02),
 8703
                  including station wagons and racing cars.
 8708             Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
 8901             Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods.
                  Optical fibres and optical fibre bundles; optical fibre cables other than those of heading 85.44; sheets and plates of polarising
 9001             material lenses (including contact lenses), prisms, mirrors and other optical elements, of any material, unmounted, other
                  than such elements of glass not optically worked.
                  Liquid crystal devices not constituting articles provided for more specifically in other headings; lasers, other than laser
 9013
                  diodes; other optical appliances and instruments, not specified or included elsewhere in this Chapter.
                  Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other
 9018
                  electro-medical apparatus and sight-testing instruments.
                  Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this Chapter; profile
 9031
                  projectors.

Table 6 Export and Import trend of MPE & MEM items between Korea and Switzerland

                                                                                                                   (Unit: HS 4-digit, US$ thousand, %)

 HS                              2017                                           2018                                       2019(3Q)
 code     Export       YoY(%)      Import     YoY(%)      Export      YoY(%)      Import     YoY(%)       Export       YoY(%)     Import    YoY(%)
 7106      2,132         -78.9          49      199.6       1,026       -51.9          12      -75.3      10,072        881.3       66          486.3
 7108     20,426         87.4       265,772     136.3      27,435       34.3      249,085       -6.3      30,800         22.5     180,586       -23.6
 7110        0          -100.0      2,208       -13.6       4,526        0.0       2,820        27.7      17,120        316.2      2,280        -12.1
 7113      14,197        -11.8      79,875       30.1      19,726       38.9       78,122       -2.2      13,326        -27.7      94,771       27.9
 8409       698          -4.0       19,453       8.2         592        -15.2      18,527       -4.8        434         -19.4      10,631       -38.8
 8411       121         266.7        5,279      -39.6         6         -95.1      13,211      150.2       1,579       26,357.9   19,866        104.4
 8413      4,065         29.3       13,477       8.4        2,912       -28.4      22,909       70.0       2,882         12.3      14,104       -25.5
 8414      3,476         84.9       96,096       12.2       6,369       83.2       73,622      -23.4       4,518        -25.1     80,618        16.5
 8419        87          -47.1      31,929       20.2        610       604.1       50,742       58.9        94          -84.5     26,343        -46.8
 8456        47           8.1       74,334       61.5         -        -100.0      60,193      -19.0        587          0.0      31,848        -46.4
 8466      3,778         84.6       15,324       25.8       4,150        9.8       12,476      -18.6       4,493         17.1      12,125        7.7
 8477       610         746.3        9,347       57.5        498        -18.4      6,075       -35.0        515          6.8       23,141       297.5
 8479      1,757         20.4       34,080      -25.7        822        -53.2      39,134       14.8       1,791        120.5     36,947         0.9
 8481      3,152         79.6      109,605       18.7       3,638       15.4       92,067      -16.0       2,625        -21.9      61,748       -28.6
 8486      1,584        260.4       38,584       7.9        1,575       -0.5       31,496      -18.4       4,294        204.5     28,293        20.1
 8501      4,067         50.9       18,123       43.1       4,207        3.4       23,668       30.6       3,785         -5.2     28,180        28.1

MEM OPPORTUNITIES IN KOREA
11
8532       956         53.8       15,688       18.0        914         -4.5      11,449      -27.0         1,044    15.6       9,107       -15.7
 8536       589          8.0       18,674       43.1        528         -10.3     22,334       19.6          462     -4.3      16,476      -20.5
 8538       159         49.3       13,053       23.6        74          -53.2     13,845       6.1           60      -19.7     10,304      -20.1
 8542      4,721        -32.7      14,951        1.7      12,774        170.6     11,277      -24.6         10,053   -12.5     10,769       2.6
 8604        -            -           -           -          -            -          -          -             -        -       11,029          -
 8703     166,375       37.9         88         87.7      138,928       -16.5       71        -19.7     119,033      -5.6        56        -20.4
 9018      7,862        15.7       40,270       8.3        7,096        -9.7      45,364       12.6         7,731    16.4      49,128       20.0
 9021      2,240        60.8       71,344       6.5        2,324         3.7      71,432       0.1          2,739    21.0      72,780       14.4
 9026       170         -10.5      21,226       7.3         136         -20.2    20,526        -3.3          134     18.9      19,675        7.1
 9027      1,360        -2.2       45,783       27.5       1,529        12.4     42,088        -8.1         1,616    10.5      35,956       -0.4
 9030       134          0.3       11,479       -11.5       195         45.8      10,406       -9.3          460     206.8     11,779       53.4
 9031       605         -18.2      27,748       13.0        959         58.6      28,799       3.8          1,043    27.3      26,266       -1.2
 9101      11,120       -22.3     126,394       -1.6      26,893        141.9    165,670       31.1         16,062   -36.5    175,239       14.7
 9102      6,042        28.8      382,551       18.3       7,994        32.3     572,948       49.8         3,159    -58.3    558,150       4.5

Table 7 Descriptions on items by HS Code

 HS code         Item Description
 7106            Silver (including silver plated with gold or platinum), unwrought or in semi-manufactured forms, or in powder form.

 7108            Gold (including gold plated with platinum) unwrought or in semi-manufactured forms, or in powder form.

 7110            Platinum, unwrought or in semi-manufactured forms, or in powder form.

 7113            Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal.

 8409            Parts suitable for use solely or principally with the engines of heading 84.07 or 84.08.

 8411            Turbo-jets, turbo-propellers and other gas turbines.

 8413            Pumps for liquids, whether or not fitted with a measuring device; liquid elevators.

                 Air or vacuum pumps, air or other gas compressors and fans; ventilating or recycling hoods incorporating a fan, whether or
 8414
                 not fitted with filters.
                 Machinery, plant or laboratory equipment, whether or not electrically heated (excluding furnaces, ovens and other
                 equipment of heading 85.14), for the treatment of materials by a process involving a change of temperature such as heating,
 8419            cooking, roasting, distilling, rectifying, sterilizing, pasteurizing, steaming, drying, evaporating, vaporizing, condensing or
                 cooling, other than machinery or plant of a kind used for domestic purposes; instantaneous or storage water heaters, non-
                 electric.
                 Machine-tools for working any material by removal of material, by laser or other light or photon beam, ultrasonic, electro-
 8456
                 discharge, electro-chemical, electron beam, ionic-beam or plasma arc processes.

                 Parts and accessories suitable for use solely or principally with the machines of headings 84.56 to 84.65, including work or
 8466            tool holders, self-opening dieheads, dividing heads and other special attachments for machine-tools; tool holders for any type
                 of tool for working in the hand.

                 Machinery for working rubber or plastics or for the manufacture of products from these materials, not specified or included
 8477
                 elsewhere in this Chapter.

MEM OPPORTUNITIES IN KOREA
12
8479          Machines and mechanical appliances having individual functions, not specified or included elsewhere in this Chapter.

               Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, vats or the like, including pressure- reducing valves
 8481
               and thermostatically controlled valves.

               Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or wafers,
 8486          semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9 (C)
               to this Chapter; parts and accessories.

 8501          Electric motors and generators (excluding generating sets).

 8532          Electrical capacitors, fixed, variable or adjustable (pre-set).

               Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for
 8536          example, switches relays, fuses, surge suppressors, plugs, sockets, lamp-holders and other connectors, junction boxes), for a
               voltage not exceeding 1,000volts; connectors.

 8538          Parts suitable for use solely or principally with the apparatus of heading 85.35, 85.36 or 85.37.

 8542          Electronic integrated circuits.

 8604          Railway or tramway maintenance or service vehicles.

               Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02),
 8703
               including station wagons and racing cars.

               Instruments and appliances used in medical, surgical, dental or veterinary sciences, including scintigraphic apparatus, other
 9018
               electro-medical apparatus and sight-testing instruments.

               Orthopaedic appliances, including crutches, surgical belts and trusses; splints and other fracture appliances; artificial parts
 9021          of the body; hearing aids and other appliances which are worn or carried, or implanted in the body, to compensate for a
               defect or disability.

               Instruments and apparatus for measuring or checking the flow, level, pressure or other variables of liquids or gases (for
 9026          example, flow meters, level gauges, manometers, heat meters), excluding instruments and apparatus of heading 90.14, 90.15,
               90.28 or 90.32.
               Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers, spectrometers, gas
               or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity, expansion, surface
 9027
               tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light (including
               exposure meters); microtomes; parts and accessories thereof.
               Oscilloscopes, spectrum analysers and other instruments and apparatus for measuring or checking electrical quantities,
 9030          excluding meters of heading 90.28; instruments and apparatus for measuring or detecting alpha, beta, gamma, X-ray,
               cosmic or other ionising radiations.

               Measuring or checking instruments, appliances and machines, not specified or included elsewhere in this Chapter; profile
 9031
               projectors.

               Wrist-watches, pocket-watches and other watches, including stop-watches, with case of precious metal or of metal clad with
 9101
               precious metal.

 9102          Wrist-watches, pocket-watches and other watches, including stop-watches, other than those of heading 91.01.

MEM OPPORTUNITIES IN KOREA
13
3. Key Items

In this report, 46 MPE items were selected out of the designated 100 key items according to the Guidelines on Strengthening
the Competitiveness of the Korean MPE industry. 32 items throughout Group I-III as below fall under the export restricted
items by Japan which are arranged in 10-digit HS code. Additional standards such as total ratio, amount, and value of import
were applied to filter the most relevant items to MPE.

14 items in the Group IV in this chapter are not included in the export control list by Japan. However, these fall under the 100
items the Korean government wants to diversify to achieve more balanced industry development and stable supply.

The items listed in this chapter portray potential business opportunities for Swiss MEM exporters.

Table 8 Four Key Item Groups

                       Group I: 13 Items                                           Group II: 12 Items

 ✓       Subject to Japan’s export controls on Korea             ✓   Subject to Japan's export controls on Korea
 ✓       Total import share: more than 50%                       ✓   Total import share: less than 50%
 ✓       Share of imports from Japan: more than 50%              ✓   Share of imports from Japan: less than 50%
 ✓       Import amount from Japan: more than $10M                ✓   Import amount from Japan: more than $30M

                      Group III: 7 Items                                           Group IV: 14 Items

 ✓       Subject to Japan’s export controls on Korea             ✓   Not subject to Japan’s export controls on Korea
 ✓       Total import share: more than 50%                       ✓   Total import share: more than 50%
 ✓       Import amount from Japan: more than $50M                ✓   Import amount from Japan: more than $40M
 ✓       Increasing imports                                      ✓   Increasing imports

Details on each item with the respective HS Code throughout Group I-IV will be presented with import & export trends in
value, market flash and major local/foreign suppliers in the market. As the filter is applied on Korean customs import data,
there is no differentiation possible for items produced by a Swiss manufacturer in Switzerland or abroad.

3.1. GROUP I

In this part, following items are identified which are subject to Japan’s export curbs with an import ratio of more than 50%, of
which more than 50% are imported from Japan, and of which import values from Japan total more than $10M.

Table 9 Selected Key Items in 10-digit HS Code

 N0. 10-Digit HS Code                                                  Description

     1        9027801000        Instruments and apparatus for physical or chemical analysis

     2        8537102010        Numerical control panels
                                Grinding or polishing machines for processing of semiconductor wafer, including lapping
     3        8486209310
                                machines

MEM OPPORTUNITIES IN KOREA
14
4       8486103020          Grinding or polishing machines for processing of wafer, including lapping machines
                                 Pattern generating apparatus of a kind used for producing masks or reticles from photoresist
     5       8486401010
                                 coated substrates
     6       8532210000          Tantalum

     7       8479909060          Presses or extruding machines

     8       8407210000          Outboard motors

     9       8421219020          Filtering or purifying machinery and apparatus for making semiconductor devices

  10         8486401040          Machines and apparatus for etching, cleaning or stripping mask and reticle

  11        8460230000           Other cylindrical grinding machines, numerically controlled

  12         8543709020          Detectors, including optical sensor

  13         8486209321          Laser operated apparatus

3.1.1     9027801000 (Device for physical or chemical analysis)

Description: Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers,
spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity,
expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light
(including exposure meters); microtomes.

Imports & Exports:

            Imports          2017         2018        2019_3Q
             (Mil.$)         433.6        471.5         321.4

             Country         Balance      Export       Import
             (2018)           (M.$)       (M.$)         (M.$)

              Japan          (254.7)        32.6        287.2

               USA           (54.0)          6.5         60.4

            Germany           (31.9)         3.7         35.6

                UK           (28.3)          2.0         30.3

              China           152.2         168.9        16.7

Market Flash: From 2013 to 2017, the global market for auto bio-chemical analysis devices grew by an average of 5.18%. In
2017, the size of the global market for auto bio-chemical devices was $3,131M and 111,428 units.

MEM OPPORTUNITIES IN KOREA
15
Major Suppliers:
  • Japan: Hitachi
  • Global: Roche (Switzerland), Danaher (US), Siemens Healthcare (Germany), Thermo Scientific (US), Sunostik (China)

3.1.2     8537102010 (Numerical control panels)

Description: Boards, panels, consoles, desks, cabinets and other bases, equipped with two or more apparatus of heading 85.35
or 85.36, for electric control or the distribution of electricity, including those incorporating instruments or apparatus of
Chapter 90, and numerical control apparatus, other than switching apparatus of heading 85.17.

Imports & Exports:

             Imports          2017      2018        2019_3Q

              (Mil.$)        224.8      230.0          115.1

             Country         Balance    Export        Import
             (2018)           (M.$)     (M.$)          (M.$)
               Japan         (209.6)     0.3          209.9

             Germany          (11.4)      0.1          11.5

               China           6.9       10.1           3.3

               Israel         (2.9)      0.0            2.9

                USA            5.5        6.3           0.8

Market Flash: The annual growth rate of the global market for Industrial Control and Factory Automation is 8.8%. Through
2025, the industrial robot market, which is the essential part of this category, is expected to grow to US$ 91,000M.

Major Suppliers:
  • Japan: Hitachi Ltd, Fanuc Corp, Fuji Electric, MRON Corp, Mitsubishi Electric Corp, Yokogawa Electric Corp
  • Global: Dwyer Instruments, Emerson Electric, General Electric, Hewlett-Packard, Honeywell International (US),
      Danfoss A/S (Denmark), Progea Srl (Italy), Schneider Electric SA, Siemens AG, Krohne Messtechnik GmbH, Vega
      Grieshaber KG, WIKA Alexander Wiegand SE & Co. KG (Germany)

3.1.3     8486209310 (Grinding or polishing machines for processing of semiconductor wafer, including
          lapping machines)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

MEM OPPORTUNITIES IN KOREA
16
Imports           2017      2018       2019_3Q

              (Mil.$)         677.6      428.7         73.1

              Country         Balance    Export       Import
              (2018)           (M.$)     (M.$)         (M.$)
             Singapore        (266.7)     0.0          266.7

               Japan          (160.2)      1.6         161.8

             Vietnam            2.9        3.0          0.1

               China           23.4       23.4          0.0

                USA             16.3      16.3          0.0

Market Flash: The size of the market for Wafer Polising and Grinding in 2018 was about $345M. By 2024, the market is
expected to grow to $464M with a growth rate of 4.1%

Major Suppliers:
  • Japan: Tokyo Seimitsu Co. Ltd. (Accretech Create Corp.), Ebara Corporation, Komatsu NTC Ltd., Okamoto
      Corporation, Logitech Ltd., Disco Corporation
  • Global: Applied Materials Inc. (US), Lapmaster Wolters GmbH, Logomatic GmbH, Entrepix Inc. (US), Revasum Inc.
      (US)

3.1.4     8486103020 (Grinding or polishing machines for processing of wafer, including lapping machines)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

            Imports           2017       2018       2019_3Q

             (Mil.$)           31.1      110.7        58.5

            Country          Balance    Export       Import
            (2018)            (M.$)     (M.$)         (M.$)
             Japan           (98.3)      0.1          98.4

           Germany           (10.8)      0.3          11.1

MEM OPPORTUNITIES IN KOREA
17
USA            (0.6)      0.3            1.0

               UK            (0.1)      0.0            0.1

             Taiwan          0.8        0.9            0.1

Market Flash: In 2018, the size of the market for Wafer Polishing and Grinding was $344M. By 2024, the market is expected to
grow to $464M with a growth rate of 4.1%.

Major Suppliers:
  • Japan: Tokyo Seimitsu Co. Ltd. (Accretech Create Corp.), Ebara Corporation, Komatsu NTC Ltd., Okamoto
      Corporation, Logitech Ltd., Disco Corporation
  • Global: Applied Materials Inc. (US), Lapmaster Wolters GmbH, Logomatic GmbH, Entrepix Inc. (US), Revasum Inc.
      (US)

3.1.5     8486401010 (Pattern generating apparatus of a kind used for producing masks or reticles from
          photoresist coated substrates)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

             Imports          2017       2018        2019_3Q

              (Mil.$)         172.2      95.2          214.5

             Country         Balance    Export        Import
             (2018)           (M.$)     (M.$)          (M.$)
               Japan         (60.3)      0.0           60.3

              Sweden         (29.0)       5.3          34.3

             Germany          (0.5)      0.0            0.5

                USA            0.1        0.1           0.0

           Hong Kong          (0.0)      0.0            0.0

Market Review: not enough information

Major Suppliers:
  • Japan: Toppan Printing Inc, Canon Materials Inc.

MEM OPPORTUNITIES IN KOREA
18
•   Global: Applied Materials, Inc. (US), KLA-Tencor Corporation (US), Mycronic (Sweden), Heidelberg Instruments
         (Germany)

3.1.6     8532210000 (Tantalum)

Description: Electrical capacitors, fixed, variable or adjustable (pre-set).

Imports & Exports:

             Import           2017        2018        2019_3Q

             (Mil.$)         134.3        116.8          96.5

             Country         Balance     Export         Import
             (2018)           (M.$)      (M.$)           (M.$)
              Japan          (48.1)        2.3           50.4

             Thailand        (15.5)        0.5           15.9

           Philippines        (13.1)       2.5           15.6

              China           27.5        42.3           14.8

             Czechia          (7.4)        0.0            7.4

Market Flash: Through 2024, the market is expected to grow at a rate of 5.81% (CAGR). Major reasons for growth are the wide
application of Tantalum in the electronic market as well as the aerospace and gas-turbine industry. China and Korea are the
countries that consume the most.

Major Suppliers:
  • Japan: Taki Chemical Co., Ltd, Rohm Semiconductors
  • Global: H.C. Strack (Germany), Duoluoshan Sapphire Rare Metal Co., Fogang Jiata Metals Co., Ningxia Orient
      Tantalum Industry Co., China Minmetals Corp (China), Metallurgical Products Co., Global Advanced Metals, Alkane
      Resources Ltd. (US), ULBA Metallurgical Plant (Russia), Altura Mining Ltd. (Australia)

MEM OPPORTUNITIES IN KOREA
19
3.1.7     8479909060 (Presses or extruding machines)

Description: Machines and mechanical appliances having individual functions, not specified or included elsewhere in this
Chapter.

Imports & Exports:

             Imports          2017      2018        2019_3Q

              (Mil.$)          51.1     54.7          36.7

              Country        Balance   Export        Import
              (2018)          (M.$)    (M.$)          (M.$)
               Japan          (42.3)     3.0          45.3

               China          (3.0)      0.6           3.6

             Germany          (2.6)      0.4           3.1

              Taiwan          (1.4)      0.0           1.4

                USA           (0.0)      0.6           0.6

Market Flash: Through 2024, the global market for hydraulic press machines is expected to grow at a rate of 4.53% CAGR, with
a volume of $22,249M.

Major Suppliers:
  • Japan: Japan Automatic Machine Co. Ltd, Komatsu, Sanki Seiko Co., Ltd.
  • Global: Actuant Corporation (US), Dorst Technologies GmbH & Co. KG (Germany), Fujian Haiyuan Automation
      Equipments Co. Ltd. (China), Gasbarre Products, Inc. (US)

3.1.8     8407210000 (Outboard motors)

Description: Spark-ignition reciprocating or rotary internal combustion piston engines.

Imports & Exports:

             Imports          2017      2018       2019_3Q

              (Mil.$)         36.9      33.1          25.5

             Country         Balance   Export        Import
             (2018)           (M.$)    (M.$)          (M.$)

MEM OPPORTUNITIES IN KOREA
20
Japan          (26.7)       0.0           26.7

               USA           (5.7)        0.0           5.7

              China          (0.4)        0.0           0.4

             Thailand        (0.2)        0.0           0.2

             Norway          (0.0)        0.0           0.0

Market Flash: The item’s main application is light boat engines for leisure and commercial boats. Through 2024, the market is
expected to grow at a rate of 4.54% CAGR.

Major Suppliers:
  • Japan: Suzuki Motor, Yamaha Motor, Honda Motor
  • Global: Mercury Marine (US), Volvo Penta (Sweden), Cummins Inc. (US)

3.1.9     8421219020 (Filtering or purifying machinery and apparatus for making semiconductor devices)

Description: Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases.

Imports & Exports:

             Imports         2017         2018         2019_3Q

             (Mil.$)          9.8         28.6            18.9

             Country     Balance      Export        Import
             (2018)      (M.$)        (M.$)         (M.$)

              Japan          (24.9)        0.0           25.0

               USA           (2.0)         0.1            2.1

            Germany           (1.3)        0.0            1.3

           Netherland         0.0          0.2            0.2

              China           6.2          6.2            0.0

Market Flash: The global market for industrial centrifugal separators in 2016 was $831M and is expected to grow to $1,111M by
2022 (CAGR 4.9%). The major application areas are chemistry, food & beverage, medical, water recycling and the pulp and
paper industries.

Major Suppliers:

MEM OPPORTUNITIES IN KOREA
21
•   Japan: Mitsubishi Kakoki Kaisha
     •   Global: Andritz (Austria), Alfa Laval (Sweden), GEA Group/Hiller, Heinkel (Germany), Thomas Broadbent,
         Schlumberger, Ferrum, SPX Flow (US), FLSmidth (Denmark), Gruppo Pieralisi (Italy)

3.1.10     8486401040 (Machines and apparatus for etching, cleaning or stripping mask and reticle)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

             Imports          2017      2018        2019_3Q

              (Mil.$)         15.6       32.4          3.4

             Country         Balance   Export        Import
             (2018)           (M.$)    (M.$)          (M.$)
              Japan           (16.1)     0.3           16.4

               USA           (16.0)      0.0           16.0

              China           15.9       15.9          0.0

             Taiwan            3.0       3.0           0.0

             Vietnam           0.0       0.0           0.0

Market Flash: not enough information

Major Suppliers:
  • Japan: Hitachi Metals Ltd, Asahi Diamond Industrial Co Ltd, Jetkt Corporation
  • Global: AB Sandvik Coromant (Sweden), BIAX Schmid & Wezel GmbH & Co. KG, KOMET Group GmbH, Sprenger
      Schleiftechnik GmbH (Germany), Forbes & Company Ltd (India), Jarvis Cutting Tools, Inc. (US), Jiangsu Funlin Super
      Hard Tools Co, Shanghai Machine Tool Works Ltd. (Ecotech Machinery) (China)
      Ehwa Diamond Industrial Co., Ltd (Korea), Janinher Machine Co. Ltd, Palmary Machinery Co. Ltd (Taiwan)

MEM OPPORTUNITIES IN KOREA
22
3.1.11    8460230000 (Other cylindrical grinding machines, numerically controlled)

Description: Machine-tools for deburring, sharpening, grinding, honing, lapping, polishing or otherwise finishing metal or
cermets by means of grinding stones, abrasives or polishing products, other than gear cutting, gear grinding or gear finishing
machines of heading 84.61.

Imports & Exports:

              Imports         2017        2018        2019_3Q

               (Mil.$)        12.1        21.4           20.2

              Country        Balance     Export         Import
              (2018)          (M.$)      (M.$)           (M.$)

               Japan         (12.3)        1.4           13.7

             Germany          (2.7)        0.1            2.8

            Switzerland       (2.6)       0.0             2.6

              Czechia         (1.6)       0.0             1.6

              Taiwan          (0.4)       0.0            0.4

Market Flash: not enough information

Major Suppliers:
  • Japan: Hitachi Metals Ltd, Asahi Diamond Industrial Co Ltd, Jetkt Corporation
  • Global: AB Sandvik Coromant (Sweden), BIAX Schmid & Wezel GmbH & Co. KG, KOMET Group GmbH, Sprenger
      Schleiftechnik GmbH (Germany), Forbes & Company Ltd (India), Jarvis Cutting Tools, Inc. (US), Jiangsu Funlin Super
      Hard Tools Co. / Shanghai Machine Tool Works Ltd.(Ecotech Machinery) (China)
      Ehwa Diamond Industrial Co., Ltd (Korea), Janinher Machine Co. Ltd. / Palmary Machinery Co. Ltd (Taiwan)

3.1.12    8543709020 (Detectors, including optical sensor)

Description: Electrical machines and apparatus, having individual functions, not specified or included elsewhere in this
Chapter.

Imports & Exports:

              Import         2017       2018        2019_3Q

              (Mil.$)        65.8        49.1          29.1

MEM OPPORTUNITIES IN KOREA
23
Country         Balance   Export         Import
             (2018)           (M.$)    (M.$)           (M.$)
              Japan           (19.8)     7.0           26.7

              China            10.0      17.3           7.3

               USA             (5.1)     1.5            6.6

              France           (1.5)     0.0            1.6

              Market           (1.2)     0.2            1.4

Market Flash: Through 2025, the market is forecast to grow at 6.8% CAGR to a volume of $1,580M. There are three major
product categories: Fiber Optic Sensors, Image Sensors and Biophotomic Sensors.

Major Suppliers:
    •    Japan: Sony Corp, Omron Corp, Hamamatsu Photonics
    •    Global: NP Photonics, Inc. (US), Banpil Photonics, Inc. (US), Keyence Corporation of America (US), ON
         Semiconductor Corp. (US), Prime Photonics (US), Pepperl+Fuchs GmbH (Germany), Samsung Electronics Co., Ltd.
         (Korea)

3.1.13    8486209321 (Laser operated apparatus)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

              Import          2017      2018        2019_3Q

              (Mil.$)         18.7       14.5          23.6

            Country          Balance   Export        Import
            (2018)            (M.$)    (M.$)          (M.$)
              Japan          (14.5)      0.0          14.5

              China            1.0       1.0           0.0

             Poland           0.0        0.0           0.0

Market Flash: The global semiconductor laser market in 2017 was estimated to be about $190M. The market is expected to
grow to $383M by 2025 with a growth rate of 9.47% CAGR.

MEM OPPORTUNITIES IN KOREA
24
Major Suppliers:
    •    Japan: Sony, Nichia, Sharp, Ushio, ROHM
    •    Global: Topica Photonics AG (Germany), Arima Lasers (Taiwan), Newport Corp (US), Finisar (US)

3.2. GROUP II

In this part, following items are identified which are subject to Japan’s export curbs with an import ratio of more than 50%, of
which less than 50% are imported from Japan, and of which import values from Japan total more than $30M.

Table 10 Selected Key Items in 10-digit HS Code

 No.      10-Digit HS Code                                            Description

     1        8486206020       Step and repeat aligners (semiconductor)

     2        9027100000       Gas or smoke analysis apparatus

     3       8482500000        Other cylindrical roller bearings

     4       8482300000        Spherical roller bearings

     5       8408909030        Internal combustion engines for heading 84.29

     6        9022192000       X-rays apparatus for industrial use

     7        8408102000       Diesel engine with a rating more than 300 kW, not exceeding 2,000 kW

     8        8412310000       Linear acting (cylinders)

     9        8501101000       DC motors
                               Automated machines and apparatus for transport, handling and storage of
  10          8486403010       semiconductor wafers, wafer cassettes, boxes and other material for semiconductor
                               devices
   11         8486208410       For dry-etching patterns on semiconductor materials

  12         8486204000        Machines for depositing membrance or sputtering metal on semiconductor wafers

MEM OPPORTUNITIES IN KOREA
25
3.2.1     8486206020 (Step and repeat aligners)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

              Import           2017        2018          2019_3Q

              (Mil.$)         101.4        658.1           48.1

             Country         Balance      Export          Import
             (2018)           (M.$)       (M.$)            (M.$)
           Netherlands       (501.6)        1.6            503.2

              Japan           (112.2)       19.9           132.1

            Singapore          (7.5)        3.2            10.7

               USA             0.6          6.0               5.3

               Italy           (4.1)        0.0               4.1

Market Flash: Apparatus used for photomasking process to align light exposure. The global market is forecast to grow at a rate
of 4.5% and reach $2,300M by 2025.

Major Suppliers:
    •    Japan: Canon, Nikon, Nuflare Technology, JEOL
    •    Global: ASML Holding (Netherlands), Veeco Instruments (US), Rudolph Technologies, Inc. (US), Ultratech, Inc.
         (US), SUSS MicroTec (Germany), EV GROUP (Austria)

3.2.2     9027100000 (Gas or smoke analysis apparatus)

Description: Instruments and apparatus for physical or chemical analysis (for example, polarimeters, refractometers,
spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscosity, porosity,
expansion, surface tension or the like; instruments and apparatus for measuring or checking quantities of heat, sound or light
(including exposure meters); microtomes.

Imports & Exports:

             Imports         2017       2018        2019_3Q

              (Mil.$)        350.9      401.7         307.1

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Country         Balance    Export      Import
             (2018)           (M.$)     (M.$)        (M.$)
            Germany          (83.3)      0.4          83.7

               USA           (46.8)      33.3         80.0

             Vietnam         (70.9)      4.8          75.7

              Japan          (60.8)      2.4          63.1

             Czechia         (42.2)      0.4          42.7

Market Flash: The global market for Residual Gas Analyser is estimated at $263M and is expected to grow to $310M by 2026.

Major Suppliers:
    •    Japan: ULVAC, Horiba
    •    Global: Inficon (Switzerland), MKS Instruments (US), Standar Research Systems (US), Pfeiffer Vacuum (Germany)

3.2.3     8482500000 (Other cylindrical roller bearings)

Description: Ball or roller bearings.

Imports & Exports:

              Import          2017       2018       2019_3Q

              (Mil.$)          116.9     122.0         90.3

              Country        Balance    Export       Import
              (2018)          (M.$)     (M.$)         (M.$)
               Japan          (49.5)      0.4          49.9

             Germany          (26.3)      0.6          27.0

               China          (10.6)      7.3          18.0

                USA            (5.2)      2.3           7.5

             Romania           (7.0)      0.0          7.0

Market Flash: The size of the global bearing market is about $7,700M and is growing at a rate of 8.7%. The ball bearing market
in particular is expected to reach $6,200M by 2025 (CAGR 8.4%).

Major Suppliers:

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•     Japan: NTN Corp., Minebea, Mitsumi, THK
     •     Global: Schaeffler (Germany), SKF (Sweden), Timken (US), GGB Bearing (US)

3.2.4     8482300000 (Spherical roller bearings)

Description: Ball or roller bearings.

Imports & Exports:

             Imports          2017       2018       2019_3Q

             (Mil.$)          69.2       75.0         55.3

            Country          Balance    Export       Import
            (2018)            (M.$)     (M.$)         (M.$)
             Japan           (33.7)      0.1          33.9

           Germany           (17.9)      0.4          18.3

             China            (7.8)      0.7           8.5

            Sweden            (5.3)      0.0           5.3

              USA             (3.7)      1.0           4.7

Market Flash: The size of the global bearing market is about $7,700M, and it is growing at a rate of 8.7%. The ball bearing
market in particular is expected to reach $6,200M by 2025 (CAGR 8.4%).

Major Suppliers:
    •    Japan: NTN Corp, Minebea Mitsumi, THK
    •    Global: Schaeffler (Germany), SKF (Sweden), Timken (US), GGB Bearing (US)

3.2.5     8408909030 (Internal combustion engines for heading 84.29)

Description: Compression-ignition internal combustion piston engines (diesel or semi-diesel engines).

Imports & Exports:

             Import           2017       2018       2019_3Q

             (Mil.$)          262.8     353.7         217.8

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Country         Balance   Export        Import
             (2018)           (M.$)    (M.$)          (M.$)
             Sweden          (107.0)     0.0          107.0

                UK           (93.4)      0.0           93.5

            Germany          (85.0)      0.0          85.0

              Japan          (48.6)      0.0          48.6

               USA           (12.8)      0.5           13.3

Market Flash: Mainly internal combustion systems for automobiles, commercial trucks, etc. Between 2014 and 2019, the
growth rate of the piston system market was 6.9% CAGR, rising to a total of about $4,400M. However, due to the recent trend
of engine downsizing and the growth of the EV market, the market is expected to gradually shrink.

Major Suppliers:
    •    Japan: Hitachi Automotive Systems, Aisin Seiki, Art Metal Mfg
    •    Global: PT Astra (Indonesia), Shandong Binzhou Bohan Pistons (China), Rheinmetal Automotive (Germany)

3.2.6     9022192000 (X-rays apparatus for industrial use)

Description: Apparatus based on the use of X-rays or of alpha, beta or gamma radiations, whether or not for medical, surgical,
dental or veterinary uses, including radiography or radiotherapy apparatus, X-ray tubes and other X-ray generators, high
tension generators, control panels and desks, screens, examination or treatment tables, chairs and the like.

Imports & Exports:

              Imports         2017      2018        2019_3Q

              (Mil.$)         104.5     105.1          52.7

             Country         Balance   Export        Import
             (2018)           (M.$)    (M.$)          (M.$)
               Japan         (52.9)      0.6           53.5

               USA           (19.8)      0.7          20.5

             Germany          (12.1)     0.4           12.5

               Israel         (6.7)      0.0           6.7

                UK            (5.4)      0.0           5.4

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Market Flash: The size of the X-ray apparatus system market in 2016 was $545M. The market is expected to grow between
2017 and 2023 at a rate of 6.51% CAGR to a value of $868M.

Major Suppliers:
    •    Japan: Olympus Corporation, Hamamatsu Photonics K.K
    •    Global: North Star Imaging, Inc. (US), Nikon Metrology NV (Belgium), Nordson DAGE (UK), YXLON International
         GmbH (Germany), VJ Group, Inc. (US), 3DX-RAY Ltd. (UK), VisiConsult X-ray Systems & Solutions GmbH
         (Germany), Smiths Detection, Inc. (UK), Mettler-Toledo International Inc. (Switzerland), General Electric Co. (US).

3.2.7     8408102000 (Diesel engine with a rating more than 300 kW, not exceeding 2,000 kW)

Description: Compression-ignition internal combustion piston engines (diesel or semi-diesel engines).

Imports & Exports:

             Imports          2017     2018        2019_3Q

              (Mil.$)         65.1     83.3          43.2

             Country         Balance   Export       Import
             (2018)           (M.$)    (M.$)         (M.$)
              Japan          (33.6)     0.6           34.1

            Germany          (22.3)     0.0          22.3

               USA            (11.7)    0.6           12.3

             Sweden           (6.9)     0.0           6.9

                UK            (2.0)     1.5           3.6

Market Flash: Mainly for mid-size commercial trucks and vessels. Due to the recent trend of eco-friendly, low-emmission
engines, the market is expected to stagnate.

Major Suppliers:
    •    Japan: Mitsubishi, Hitachi, Kawasaki, Aisin, Art Metal
    •    Global: PT Astra Otoparts TBK (Indonesia), Shandong Binzhou Bohai Poston (China), Rheinmetall Automotive AG
         (Germany), Cummins (US)

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3.2.8     8412310000 (Linear acting (cylinders))

Description: Other engines and motors.

Imports & Exports:

             Imports          2017       2018       2019_3Q

              (Mil.$)         88.4       81.3         58.7

             Country         Balance   Export       Import
             (2018)           (M.$)    (M.$)         (M.$)
              Japan          (36.9)       3.5         40.4

              China          (19.2)       2.8         22.0

               USA            (5.0)       1.0         6.0

            Germany           (5.0)       0.6          5.6

               Italy          (3.7)      0.0           3.7

Market Flash: The size of the global linear motion market in 2018 was $2,800M and is forecast to grow at a rate of 5.3% CAGR
through 2024 to a value of $4,400M. These items are core parts for robotics and factory automation.

Major Suppliers:
    •    Japan: Yaskawa Electric, Mitsubishi Electric, THK, NSK, Nippon Thompson
    •    Global: HIWIN Technologies Corp. (Taiwan), Robert Bosch GmbH, Schaeffler Technologies AG & Co. KG
         (Germany), Rockwell Automation Inc., Timken Company, Fortive (US), Hepco Motion (UK), SCHNEEBERGER
         Group (Switzerland)

3.2.9     8501101000 (DC motors)

Description: Electric motors and generators (excluding generating sets).

Imports & Exports:

             Imports          2017       2018       2019_3Q

              (Mil.$)         860.6      687.1        441.4

             Country         Balance     Export      Import
             (2018)           (M.$)      (M.$)        (M.$)

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China         (322.1)     67.3         389.4

           Phillippines      (105.1)      3.3         108.4

             Vietnam         (61.2)      11.6          72.8

               Japan         (29.4)      16.6          45.9

             Germany         (14.8)       1.7          16.6

Market Flash: Through 20205, the global market for brushless DC motors is expected to grow at a rate of 6.7% CAGR to a size
of $22,700M. This category is widely used to achieve high efficiency, low maintenance costs, stable peak output, etc.

Major Suppliers:
    •    Japan: Toshiba, Nidec
    •    Global: ABB Group (Baldor Electric Company), Buhler Motor GmbH (Germany), Maxon Motors AG (Switzerland),
         Ametek, Inc. (US), Allied Motion Technologies, Inc. (US), Johnson Electric Holdings Limited (Hong Kong), Rockwell
         Automation, Inc. (US), ARC Systems, Inc. (US)

3.2.10 8486403010 (Automated machines and apparatus for transport, handling and storage of
       semiconductor wafers, wafer cassettes, boxes and other material for semiconductor devices)

Description: Machines and apparatus of a kind used solely or principally for the manufacture of semiconductor boules or
wafers, semiconductor devices, electronic integrated circuits or flat panel displays; machines and apparatus specified in Note 9
(C) to this Chapter; parts and accessories.

Imports & Exports:

             Imports         2017       2018        2019_3Q

              (Mil.$)        636.1      458.0         366.1

              Country        Balance    Export        Import
              (2018)          (M.$)     (M.$)          (M.$)
               Japan         (171.3)      9.0         180.3

            Singapore        (158.6)     21.2          179.8

                USA          (21.3)      20.5          41.8

             Germany         (33.9)       1.2          35.1

           Netherlands        (4.5)       0.9           5.4

Market Flash: not enough information

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