Japan yesterday said that it has granted the first permit for South Korea-bound shipment of chemicals for use in high-tech materials under Tokyo’s new export requirement that has increased tensions with Seoul.
Japanese Minister of Economy, Trade and Industry Hiroshige Seko made a rare announcement of such approval, saying that officials determined the transaction raised no security concerns.
The move is apparently meant to calm South Korean anger over Tokyo’s export curbs and show that there is no trade ban in place.
Japan imposed stricter controls on three key materials — fluorinated polyimides, photoresists and hydrogen fluoride — that are used mainly for South Korea’s semiconductor industry as of July 4. The rules also downgrade South Korea’s trade status beginning later this month.
Japanese chemical manufacturers have expressed concerns that case-by-case inspections might prolong approval process and hold up production lines for their customers.
The first approval came after about a month, much faster than the standard 90 days.
“The permit merely demonstrates that export licensing by the Japanese government is not arbitrary and is granted to any legitimate transactions that pass strict inspections,” Seko told reporters. “The step we took recently is not an export ban.”
South Korean President Moon Jae-in remained cautions while expressing hope that the impact of Japan’s measures will not be as severe as Seoul had feared.
“Our government has planned for worst-case situation since Japan converted export approvals of the three materials to a case-by-case basis and has been preparing and announcing both short-term and long-term measures,” Moon said. “Of course, Japan may not proceed with export restrictions and there might not be any actual damage caused [to South Korean companies], but what hasn’t changed is that uncertainty is still alive.”
South Korea says Japan is using trade to retaliate against its court decisions ordering Japanese companies to compensate Korean forced laborers before and during World War II, when the Korean Peninsula was under Tokyo rule.
Japanese officials have denied that the export controls were retaliation for the court rulings, insisting that South Korean export controls were insufficient and might not be able to include shipments of sensitive materials to third countries.
Seko stood by Tokyo’s position and warned of a possibility of adding more items in addition to the three chemicals if export control officials suspect Seoul of inappropriate shipments.
South Korean Prime Minister Lee Nak-yon said that Tokyo had allowed the export of EUV photoresists, a chemical crucial for Samsung Electronics Co’s advanced contract chipmaking production.
Samsung declined to comment.
It remained unclear whether the initial approval from Tokyo signals a breakthrough in trade relations.
“They approved only one out of a number of items, and they said they would approve exports for pure civilian purposes,” a senior official at the South Korean Ministry of Trade, Industry and Energy told reporters.
South Korean chipmakers are hitting a dead-end in their quest to find alternatives for key Japanese materials that have been hit with export restrictions, raising the prospect of major disruption to their operations in the next few months.
Of particular concern is sourcing of hydrogen fluouride, a key chipmaking material.
South Korean chipmakers have been desperate for Japan’s high-purity hydrogen fluoride, because it helps them get high yield rates, which is critical for profitability.
Additional reporting by Reuters
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