The Japanese export restriction for South Korea on three important materials for OLED and chip production could lead to quite a few Korean factories coming to a standstill at the end of the month. That is what Samsung and a number of component makers claim.
Samsung and the other companies would have informed the South Korean government that only new deliveries from Japan can ensure that the factories can still be running by the end of the month, writes Yonhap News, among others. A Samsung executive traveled to Japan on Sunday to seek a solution to trade restrictions that directly affect the South Korean semiconductor and panel industry. The South Korean government would be willing to invest an amount of 4.5 billion euros in the sector, partly to expand the import lines, but that will probably not help in the short term.
It concerns three materials: fluorinated polyimide, photoresist and hydrogen fluoride. Japan has limited supplies to South Korea for these materials. The restrictions were put in place last month and no more deliveries are said to have been approved since last week. Japanese companies supplying the materials first need permission from the Japanese government to ship the materials. The approval process for this would take ninety days, so that deliveries to Samsung and LG, among others, have been blocked for the time being. According to Reuters, Japan produces 90 percent of fluorinated polyimide and photoresist worldwide, making it difficult to get the materials separately from Japan.
However, LG Display says it can circumvent the effects of this trade dispute by starting up mass production at its factory in Guangzhou, China. Unlike the factories in South Korea, this factory would not be affected by the Japanese export restrictions, Business Korea writes. An LG Display official says that the materials for this factory are sourced locally and that the company is not affected by Japanese restrictions. The official says the Chinese factory is currently being tested, with mass production expected to begin in August. From that moment on, deliveries of panels for OLED TVs would rise sharply: after the start of mass production, the number of glass substrates produced each month would ‘rise from 70,000 units to 130,000 to 160,000’.
The current conflict has to do with Japanese frustration that South Korea would not abide by an agreement between the two countries. The conflict between the two countries ignited last October, when South Korea’s Supreme Court ruled that the Japanese company Nippon Steel must compensate South Koreans for forced labor imposed by Japan during World War II and the period of Japanese colonial rule. Japan believes that this issue has already been settled with the conclusion of a 1965 treaty, which at the time restored diplomatic ties between the two countries.