3 Years of Japan's Export Restrictions... "Korea's Localization Efforts Stagnant - Japan-Korea Supply Chain Maintained"

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 28th, marking three years since the Japanese government imposed export restrictions on key semiconductor materials to Korea, Japan's Nihon Keizai Shimbun reported that while Korea's efforts toward localization are accelerating, progress remains stagnant, and the semiconductor supply chain between Korea and Japan continues to be maintained.

According to a Seoul dispatch by Nihon Keizai, since Japan's export restrictions in July 2019, Korea has been promoting localization of related semiconductor materials and manufacturing equipment, but imports from Japan have started to increase again. At that time, the Japanese government announced export restrictions on three items: hydrogen fluoride, photoresist, and fluorine polyimide.

Based on statistics from the Korea International Trade Association, Nihon Keizai reported that Korea's imports of hydrogen fluoride from Japan sharply declined around July 2019 and decreased by 86% in 2020 compared to 2018, but last year saw a 34% increase compared to the previous year, and from January to April this year, imports increased by 30% year-on-year, showing a recovery trend. Photoresist imports increased by double digits year-on-year, while fluorine polyimide imports slightly decreased, according to Nihon Keizai. A representative from a Japanese material company said, "Except for hydrogen fluoride, there was no significant impact."

Additionally, Nihon Keizai added that Korea's imports of semiconductor manufacturing equipment from Japan reached $6.3 billion (approximately 8.1 trillion KRW) last year, a 44% increase from the previous year, which expanded Korea's trade deficit with Japan.

Nihon Keizai reported that Japan's export restrictions have caused distrust among Korean companies, leading Samsung Electronics and SK Hynix to provide capital support and share technology to foster alternative suppliers to Japanese products. Considering that Samsung Electronics is a key customer of Japanese companies, Nihon Keizai pointed out that in the long term, localization of materials and equipment by Korean companies will impact Japanese companies.