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Japan hits South Korea with controls on key electronic materials

Three advanced materials hard to source elsewhere will come under Japanese export controls

by Katsumori Matsuoka, special to C&EN
July 9, 2019 | APPEARED IN VOLUME 97, ISSUE 28

 

09728-buscon4-samsung.jpg
Credit: Samsung
Samsung's South Korean semiconductor operations could be affected by the export controls.

The Japanese government has imposed controls on exports to South Korea of three categories of materials that are critical to producing semiconductors and organic light-emitting diode (OLED) displays.

The materials are advanced photoresists, hydrogen fluoride, and fluorinated polyimides. The controls will likely impact the operations of Korean chip makers because of Japan’s near monopoly on advanced photoresists needed to produce the latest generations of chips. Japan is also a major producer of the grades of HF and fluorinated polyimides used in electronic manufacturing.

Two South Korean firms, SK Hynix and Samsung, are among the world’s five largest and most sophisticated producers of computer chips, particularly memory chips.

“Production of semiconductors in Korea will be affected,” says Mikiya Yamada, a chemical and textile analyst at Mizuho Securities, a large Japanese stockbroker. South Korean firms also dominate the production of OLED displays.

The measures were introduced because of a deterioration in the “relationship of trust” between Japan and South Korea, according to Japan’s Ministry of Economy, Trade and Industry. The Japanese media is reporting that Japan’s move is in retaliation for a South Korean court decision in October ordering Japanese firms to pay compensation to Koreans who were forced laborers during World War II.

Japanese companies will need to ask their government’s permission to export the chemicals affected by the controls. By the time Japan authorizes the sales, the delay to users could add up to three months. JSR, a major Japanese producer of electronic materials, says it is reviewing how to best serve its South Korean customers.

South Korean firms could get around the ban by ordering from nonJapanese plants, but that won’t be easy. An official at the Japanese hydrogen fluoride producer Stella Chemifa, for instance, notes that while the firm operates a 10,000-metric-ton-per-year plant in Singapore, capacity in Japan is far larger at 95,000 metric tons per year.

In contrast, the impact of the measures on Japanese chemical producers will likely be limited.

Hisashi Moriyama, head of Japan research at the investment bank J.P. Morgan, noted in a Japanese TV interview that while South Korea produces 26% of the world’s microchips, companies in other countries will likely step in if Korea is unable to supply the market. Japanese chemical producers would likely offset a fall in demand from South Korea by increasing shipments to other countries.

CORRECTION

This story was updated on July 10, 2019, to indicate that Stella Chemifa produces hydrogen fluoride, not photoresists.

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