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Japanese Government to Restrict Chemical Material Exports to South Korea
Putting Korean Companies on Edge
Japanese Government to Restrict Chemical Material Exports to South Korea
  • By Jung Suk-yee
  • July 2, 2019, 08:51
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The Japanese government announced on July 1 that it would restrict exports of key semiconductor and display materials to South Korea.

The Japanese government announced on July 1 that it would restrict the export of semiconductor and display materials to South Korea, causing many South Korean companies to be nervous. “Japanese companies now must obtain a permission from the Japanese government to export resist, etching gas and hydrogen fluoride to South Korea and the compulsory permission does not mean an immediate export ban,” said an industry expert, adding, “However, the announcement clearly shows that the supply of the chemical materials can be controlled at any time and South Korean companies are keeping a close eye.”

When it comes to resist, the problem is even more serious in that South Korean companies have no substitute. At present, only Japanese companies such as Shin-Etsu and Sumitomo can produce high-quality resist although their South Korean counterparts can supply low-quality resist. South Korean companies can produce no DRAM and NAND flash chips without resist supply from Japan.

The Japanese government stated that its measure is in compliance with WTO rules. The export is unlikely to be immediately stopped in that the Japanese government stressed the legitimacy of its measure. “The measure is predicted to take the form of procedural inconvenience rather than all-out restrictions,” said Eugene Investment analyst Lee Seung-woo, adding, “Comprehensive restrictions have a negative impact on Japanese exporters, too.”

If the Japanese government indeed opts for an export ban, South Korean semiconductor manufacturers’ production will be reduced naturally and then their memory chip inventory management can be facilitated. “If South Korean companies cannot produce memory chips, Japanese clients such as Sony and Panasonic as well as American companies such as Apple, HP and Dell will suffer and, as such, an export ban is burdensome for the Japanese government as well,” said an executive in the industry. “With the United States having blocked trade war escalation at the recent G20 meeting, the Japanese government is unlikely to cause a problem similar to the Huawei scandal at the sacrifice of Japanese companies,” the analyst commented, advising South Korean companies to work on scenario-specific countermeasures.