Samsung Scores Lifeline as It Navigates Japan Export Curbs
Samsung Scores Lifeline as It Navigates Japan Export Curbs
(Bloomberg) -- Samsung Electronics Co. has managed to secure an emergency supply of key materials to sustain its chip-making operations for the time being, averting short-term disruption from a Japanese ban of critical semiconductor and display components.
That temporary lifeline didn’t represent a “fundamental solution,” a Samsung spokesman said Monday, confirming a report by Yonhap over the weekend. Jay Y. Lee, the corporation’s de facto leader, had convened a meeting on Saturday with top management and asked them to prepare contingency plans, he added. The Samsung vice chairman ordered them to prepare for various scenarios, for instance should Japan remove Korea from its so-called “white-list” of nations not deemed to present a risk of weapons proliferation, the spokesman said.
Korea’s largest company is grappling with a spat between Japan and South Korea that risks upending the global technology supply chain. The government of Asia’s second largest economy this month slapped export restrictions on three materials that, while little-known outside of the industry, are profoundly important for electronics production. Samsung had less than a month’s worth of supply of the materials on average, people familiar told Bloomberg last week.
Among the targeted materials are fluorinated polyimide, required for the production of flexible panels -- such as those used in Samsung’s Galaxy Fold -- among other things. Photo-resists are key to chipmaking, while hydrogen fluoride is needed for both chip and display production. It’s unclear how much of each Samsung had secured, and the spokesman didn’t elaborate. Samsung has been scrambling to find alternatives and one of the ways is to secure materials from Japanese suppliers’ overseas plants.
Resurgent tensions between Japan and South Korea threaten to wallop chipmakers from Samsung to SK Hynix Inc., potentially smothering the production of memory chips and other components vital to widely used devices. That will in turn pressure an industry already struggling to come to grips with U.S.-Chinese trade tensions.
Lee had visited Japan last week to meet senior officials from the country’s business sector. Samsung’s emergency supplies were secured through the company’s efforts, separate from his trip, the spokesman added.
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, Colum Murphy
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