Korean Companies Moving to Reduce Supply Chain Risks
The Moon Jae-in administration is claiming that Japan’s export restrictions against South Korea have led to a decrease in South Korean companies’ reliance on industrial materials imported from Japan. Nikkei refuted the claim on Aug. 2.
According to the South Korean government, South Korea’s photoresist imports from Belgium have increased 10-fold and South Korea’s reliance on Japan in this industry has dipped below 50 percent since the implementation of the restrictions in July 2019. “The photoresist exported from Belgium to South Korea is supplied by Japanese chemical company JSR,” the financial newspaper pointed out, adding, “In addition, South Korea’s reliance on Japan is still over 80 percent in the resist industry as a whole.” According to Nikkei, South Korea’s resist imports from Japan increased 22 percent to US$328.29 million last year and the imports for the first half of this year increased 3 percent year on year.
“The dependence on Japanese fluorinated polyimide for use in displays is now close to zero as ultra thin glass is in use as an alternative,” the administration recently commented. However, Nikkei pointed out that the glass is used in Samsung Electronics’ foldable smartphones, these phones account for just 1 percent of Samsung Electronics’ total smartphone shipments, Japanese fluorinated polyimide are still in use in other cases, and South Korea’s fluorinated polyimide imports from Japan increased 15 percent year on year to US$44.3 million in the first half of this year.
“The South Korean government is claiming that South Korea’s dependence on Japan has fallen from 31.4 percent to 24.9 percent with regard to 100 key industrial items, but it has never mentioned the names of those items,” the newspaper said, adding, “Still, in the long term, South Korean companies’ dependence on Japan may really decrease, and they are really making efforts to that end these days.”
“South Korean companies are now aware of supply chain-related risks, and they have made requests for more production in South Korea in relation to their Japanese clients,” it went on to say, continuing, “For example, hydrogen fluoride supplier Daikin Industries decided to build a plant in South Korea, and such decisions may lead to more unemployment and industrial hollowing out in Japan.”