Japan Delays Export of Key Chipmaking Material to South Korea
Japan Delays Export of Key Chipmaking Material to South Korea
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Japan is delaying the shipment of a key material used in the production of memory chips in South Korea, according to a senior government official in Seoul.
The liquid hydrogen fluoride -- a highly purified chemical used to refine chips in production -- has yet to be shipped, even though Japan has approved exports of its gas form, the official said, declining to be identified because the information has not been made officially public. Japan may still green-light shipment because a 90-day window for review hasn’t yet closed, the official added.
On July 4, Japan imposed tougher requirements on export to South Korea of three classes of materials used in the production of semiconductors and displays, and the country has since approved shipments covering hydrogen fluoride along with things like photoresists, used for developing advanced chips. The delay in liquid hydrogen fluoride prolongs headaches for Korean companies like Samsung Electronics Co. and SK Hynix Inc., both dependent on a steady supply from Japan.
Korea’s semiconductor businesses are said to have sufficient reserves to weather short-term trade limitations. But their long-term health will demand either a restoration of normal trading with Japanese partners or the development of homegrown alternative supplies, such as those LG Display Co. has been working on, according to multiple reports.
The two neighboring countries are embroiled in a series of disputes, mostly rooted in unresolved rancor over Japan’s 1910-45 colonization of the Korean Peninsula. Hostility grew when South Korea chose last month to end a U.S.-backed military information-sharing agreement with Japan.
In August, Japan formally removed South Korea from its so-called white list of most trusted trading partners. This month, South Korea also downgraded Japan from its list of fast-track trading destinations while filing a complaint with the World Trade Organization.
Japan controls about 80% of the global market for hydrogen fluoride and South Korea buys almost 90% of the material produced by its neighbor, according to a July 29 report from Hana Financial Investment. The trade partnership has been fruitful for both sides, and before Japan intervened with its raised requirements, producers of hydrogen fluoride were able to ship the material to South Korea without restrictions for three years.
Semiconductors form a key source of income for South Korean tech champion Samsung and account for about 20% of the country’s exports.
--With assistance from Michelle Seoh.
To contact the reporter on this story: Sam Kim in Seoul at skim609@bloomberg.net
To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Vlad Savov, Edwin Chan
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