South Korea introduces outbound-investment screening on advanced semiconductors

Mechanism

Korea's regime is structurally similar to the US EO 14105 (filed: 2023-08-09-us-outbound-investment-screening-eo14105) but operates through two existing legal instruments rather than a new dedicated EO:

1. National Core Technology (NCT) list expansion. MOTIE designates specific technologies as NCT. Once designated, any export, transfer, or overseas manufacturing use of that technology requires MOTIE approval. The Nov-2024 amendment expanded the NCT list to include 12 advanced-semiconductor categories and tightened review of the "overseas manufacturing" trigger.

2. Foreign Exchange Transaction Act notification. Korean firms making outbound investments above a threshold (KRW 1B / ~USD 750k for affected sectors) in "strategic concern" jurisdictions must notify MoSF, with discretionary review.

3. Effective on 1 April 2025 — gives Samsung, SK Hynix, and the broader Korean semi sector ~5 months to align compliance procedures with existing China operations (Samsung Xi'an NAND, SK Hynix Wuxi DRAM).

Why severity 3

• Targeted but enabling. The regime allows continued

China operations — Samsung Xi'an NAND and SK Hynix Wuxi DRAM operate under VEU-style US licences plus this Korean notification regime. Both companies have continued limited China-fab expansion through 2024-25 with case-by-case approvals.

• Peer-coordinated. Korea joining the US-EU outbound-

investment-screening posture closes one of the remaining ally-side gaps. Japan has signalled similar measures (METI notification regime expanded 2024). The trilateral chip- equipment perimeter (filed: 2022-10-07-us-bis-advanced-ai-chip-controls-china, 2023-03-31-japan-meti-semi-equipment-export-controls, 2023-06-30-netherlands-asml-duv-export-licensing) now has a parallel capital-flow perimeter forming.

• Severity 3 not higher because Korean firms retain

significant flexibility in the NCT review process; the regime is gating, not blocking. Severity 4 trigger would be a denied SK Hynix / Samsung application — which has not yet materialised.

Downstream implications

• EWY (Korea ETF): structurally neutral — Samsung + SK Hynix

are >25% of EWY weight, and the regime adds compliance friction without (so far) blocking material capacity. The more-meaningful impact is the signal that the Korean government is institutionally aligned with the US-led capital-flow regime around China.

• Chinese partners of Korean fabs (memory-controller designers,

packaging firms): may face slower technology transfer.

• Cross-references: completes the global outbound-investment-

screening picture started by US EO 14105. Future filings will track: - Japan METI notification-regime expansion (likely 2025) - EU Commission's "European Economic Security Strategy" outbound-investment review (consultation 2024-25) - UK Financial Services and Markets Act 2023 outbound- investment provisions

Open questions

• First denied transaction: when does the regime hit a real

case? Track quarterly MOTIE statistics on NCT-export approvals + denials.

• The "strategic concern" jurisdiction list is administrative;

Korea has not formally named China but the de-facto target is unambiguous. Watch for explicit-naming policy moves.