Tuesday, October 15, 2019
Diplomatic Conflict between S. Korea and Japan Leading to Economic Concerns
Korean Firms Fear Japan's Export Ban of Key Items
Diplomatic Conflict between S. Korea and Japan Leading to Economic Concerns
  • By Jung Suk-yee
  • May 3, 2019, 09:15
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South Korean companies are increasingly concerned about escalating diplomatic conflicts between South Korea and Japan as the Japanese government is poised to take action once Japanese companies are forced to sell their assets in Korea.

South Korean forced labor victims submitted a request to the Supreme Court on May 1 so that Japanese companies such as Nippon Steel are forced to sell their assets in South Korea. Under the circumstances, South Korean companies’ concerns are growing over increasing conflicts between South Korea and Japan with the Japanese government poised to take action once the asset disposal does occur.

At present, Japanese companies such as Morita Chemical Industries and Stella Chemifa are supplying 90 percent of the hydrogen fluoride used by Samsung Electronics and SK Hynix. “Hydrogen fluoride is an essential material used for wafer cleaning and etching,” said an industry source, adding, “The hydrogen fluoride supplied by the Japanese companies is irreplaceable and the Japanese government’s import restriction on the item, if any, will hit the South Korean companies hard.”

Likewise, South Korean OLED manufacturers are heavily dependent on Japanese equipment and expressing concerns. “South Korea is one of the largest clients for Japanese OLED equipment suppliers and, as such, it is rather unlikely that the Japanese government will ban the export of the equipment,” said a company in the industry, continuing, “However, things may get worse unexpectedly if the conflicts escalate.”
 

“South Korea and Japan established their diplomatic relations 54 years ago and now is the time when their conflict is at its peak,” private exchange group Seoul-Tokyo Forum explained, adding, “The size of their bilateral trade has fallen from US$100 billion to US$80 billion or so due to the deterioration of the bilateral relations that started in 2012.”