The tension between Japan and South Korea has increased global fear. The Supply chain for semiconductors could be one of the field disrupted. These two countries tightly link to the production of electronic goods, like laptops and smartphones. Earlier this month, Japan regulated tighter controls on their chemicals supply to South Korea. Thus, the Japan-South Korea dispute affects smartphone’s market in the future.
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Korean manufacturers use that chemicals to produce semiconductors. That includes memory chips, microprocessor, and integrated circuits.
Global sales of semiconductors grew 12.5% to reach $474.6 billion in 2018, as reported by research firm Gartner. However, behind the deteriorating demand, the sign of falling shares appears.
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Japan’s Move
On July 1, Japan restricted exports of three chemicals to South Korea. They are fluorinated polymide, photoresist, and hydrogen fluoride. Those chemicals are essential to produce semiconductors and display screen. Japanese exporters have to seek permission each time they ship those chemicals to South Korea. Sadly, that process alone takes 90 days.
Moreover, Japan also plans to strip South Korea of some preferential treatment. Japan is going to remove South Korea from a white list of their trustworthy country.
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The Effect
Japan is a country which produces the highest fluorinated polymide, photoresist, and hydrogen floride. Japan produces 90% world’s supply of florinated polymide, and around 70% of hydrogen fluoride. Thus, South Korean companies will get difficulties to find alternative suppliers.
Even if they find alternatives, their new supplier may face the quality issue. Besides, they may also fail to provide adequate supplies demanded by South Korea manufactures.
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South Korea is the home of semiconductors giants, like Samsung Electronics and SK Hynx. They supply 61% of components for memory chips globally in 2018. Thus, production disruption will be bad news for global customers. Therefore, major tech companies like Apple and Huawei may also get affected. In the end, the Japan-South Korea dispute affects smartphone’s market.
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