Japan limits export of chemicals

Author: Thanh Duy Tran
Area: Supply Chain

Korea particularly hard hit

For the production of chips, a high number of high-purity chemicals are required. These were originally imported from Japan. However, Japan has restricted the supply of certain materials to South Korea.

Currently, 90% of the hydrogen fluoride component is sourced from Japan. This substance is supplied by companies such as Stella Chemifa and Morita Chemical Industries. After all, Samsung uses its homemade hydrogen fluoride in its line.

Apart from high purity hydrogen fluoride, photoresists and a material required for LED production from Japan are also limited. All these substances are of great importance for the semiconductor industry in South Korea and cannot be easily sourced from other countries.

If Japan did not work against the manufacturers of Samsung or SK Hynix, it would not have to plan a new supply chain. To do this, Japan would have to continue to guarantee a sufficient supply. However, Japan recently only allowed further supplies of chemicals to South Korea.

At the beginning of July, the ban on deliveries to South Korea containing chemicals began. These are important for the production of chips or flat screens. In addition, Seoul must now obtain an export permit if chemicals need to be delivered to South Korea.

The fight for export goods has sparked the maneuvers of the South Korean Supreme Court. The reason for this was that the company pledged $85,000 each to four Koreans who were exploited during the Second World War. Japan, on the other hand, sees this as a breach of the 1965 agreement, which was rescinded after diplomatic relations were established. The reason for this is the fear that another 220,000 Koreans will be encouraged to file claims for compensation against 300 Japanese companies. This would cost 20 billion dollars.

As an excuse for the Japanese government to continue restricting exports, it is considered that the supply of sensitive chemicals to South Korea would require a permit. The aim is to control and monitor the export of such substances.