Thu, Jul 04, 2019 - Page 10 News List

South Korea eyes chip supply chain after Japan curbs

Reuters, SEOUL

South Korea would seek to invest 1 trillion won (US$853.8 million) annually in developing home-grown materials and equipment used to produce microchips, a senior lawmaker said yesterday, after Japan tightened curbs on exports of some high-tech materials to the nation.

Japan on Monday said that it would tighten regulations on exports of materials used in smartphone displays and chips to South Korea amid a widening dispute over South Koreans who were forced to work for Japanese firms during World War II.

“We are doing a preliminary feasibility analysis [on the investment],” South Korean Legislator Cho Jeong-sik from the Democratic Party told reporters after meeting with officials from the presidential office and government ministries to discuss a response to Japan’s decision.

The export curbs could hamper production of South Korea’s chip giants Samsung Electronics Co and SK Hynix Inc, as the two chemicals targeted are essential, analysts said.

Data firm IHS Markit said that the Japanese trade restrictions would add to global trade tensions.

Asian exporters are already being strained by a prolonged slowdown in the global electronics sectors.

“A reduction or elimination in the availability of these materials will significantly impede the production of memory and other semiconductor chips, impacting major semiconductor manufacturers, including Samsung Electronics and SK Hynix,” IHS Markit executive director of semiconductor research Len Jelinek said in a note.

The Japanese Ministry of Economy, Trade and Industry on Tuesday said that its decision to tighten controls was not a contravention of the WTO, rebuffing South Korea’s earlier claims.

Cho shrugged off criticism in local media that the government is not laying out countermeasures swiftly, but he did not provide further details on the nature of the spending.

Shares in South Korean chip materials makers jumped after the government’s spending plan was made public.

Shares of Ram Technology Inc and Ocean Bridge Co Ltd, local firms producing chemicals used in chip manufacturing process, rose as much as 20 percent and 15 percent respectively.

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