South Korea’s president will meet tech executives today to discuss Japanese export restrictions on components needed to make semiconductors and
South Korea’s president will meet tech executives today to discuss Japanese export restrictions on components needed to make semiconductors and displays.
Tokyo implemented the export curbs on July 4.
Three key materials have been targeted: fluorinated polyimides, used in smartphone displays; photoresists, used to transfer circuit patterns; and hydrogen fluoride, used to etch chips. Japan is stopping preferential treatment for shipments of these three materials to South Korea and will require exporters to seek permission each time they want to ship. While South Korea is Japan’s major rival in chip production, Japan still produces between 70% and 90% of the world supply of each of these components.
The export restrictions stem from a historic dispute over the Japanese colonisation of the Korean peninsula from 1910 to 1945, in which many Koreans were used as forced labour by Japanese companies. Last October, a South Korean court ruled that Japanese Company Nippon Steel must compensate these labourers.
The weight of another round of Japanese export curbs expected in the coming months along with the controversial court ruling is likely to further hurt bilateral economic and political relations in the medium to long term. Expect South Korean chipmakers to respond to the restrictions by sourcing their components from other producers like China and Taiwan. This expected loss of business could bring Tokyo to the negotiating table—either through the WTO or bilaterally with South Korea—but likely will not given the extend to which Japan controls the market.
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