South Korean chip and display makers are expected to embrace yet more uncertainty from Japan’s restriction of exports of key materials for their production amid diplomatic rows between the two nations, market watchers said on July 1.
The Japanese government said earlier in the day that it will strengthen regulations on the export to Korea of high-tech chemicals used in semiconductors and smartphone production, apparently in response to Korea’s Supreme Court ruling on compensation for wartime forced labor.
Under the new rules, Japanese companies will have to apply for approval for each contract to export specific materials to Korean clients, including Samsung Electronics, SK hynix and LG Display.
The new rules are expected to apply to three types of materials and chemicals, including fluorine polyimide used to make flexible OLED displays, as well as resist and etching gas needed in the semiconductor fabrication process.
Japan produces about 90 percent of fluorine polyimides and resist, and 70 percent of etching gas in the world.
The latest import restriction is adding another burden to Korean tech firms, which have been in an awkward situation over the US ban on Huawei Technologies, a major client of memory chips.
Last October, Korea’s Supreme Court ruled that Nippon Steel & Sumitomo Metal should compensate four Koreans mobilized into forced labor during the 1910-45 colonial rule.
The court rejected Japanese claims that all colonial-era compensation claims were settled under a 1965 treaty that normalized diplomatic relations between the two countries.
By Ram Garikipati and newswires (firstname.lastname@example.org)