Japan Curbing Export of a Key Chipmaking Material, South Korea Says

(Bloomberg) -- Japan is delaying export approval of a material vital to South Korea’s semiconductor manufacturing industry, Korea’s trade ministry said in a statement, as the trade fight between the neighboring countries shows no signs of abating.

The trade ministry issued a statement Tuesday saying Japan has not approved the export of liquid hydrogen fluoride -- a highly purified chemical used to refine chips in production -- to South Korea even though 90 days have passed since a Japanese exporter submitted an application to do so.

The Japanese government has not approved a single export request after a 90-day window for review as it has repeatedly asked for additional documents from the exporters, the ministry said. Other materials that Japan has placed export restrictions on are being approved in a “highly restrictive manner,” it said.

In Tokyo, Chief Cabinet Secretary Yoshihide Suga told a news briefing that the Japanese government was not in a position to explain the economic situation in South Korea and Japan’s moves on its export controls were not something that would affect the supply chain.

Japan’s export curbs on three key materials crucial for manufacturing high-end chips and flexible display took effect July 4. Although the 90-day deadline is not stipulated in Japanese law, it’s a conventional period of time that Japan requires for export approvals, the South Korean ministry has said.

“Japan’s hardly predictable export controls against Korea have increased uncertainties in supply chain and so substantively affected the operations of companies,” the trade ministry’s statement says. It is “discriminatory” that Japan only approves exports of the certain materials on a case-by-case basis.

South Korea maintains that Japan has so far approved for export partial amounts of fluorinated polyimide, photoresist, and hydrogen fluoride in gas form. South Korean tech giants such as Samsung Electronics Co. and SK Hynix Inc. -- dependent on the materials from Japan -- are looking for alternative sources, but transitioning to non-Japanese sourced materials could take several months.

Investors and market watchers are raising concerns over the escalating trade spat that could disrupt the global tech industry.

--With assistance from Isabel Reynolds.

To contact the reporter on this story: Sohee Kim in Seoul at skim847@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter Pae, Jon Herskovitz

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