Business

South Korea eyes investing ¥91.8 billion annually in chip supply chain after Japanese export curbs

Reuters

South Korea will seek to invest 1 trillion won (¥91.8 billion) annually in developing homegrown materials and equipment used to produce microchips, a senior ruling party lawmaker said Wednesday, after Japan tightened curbs on exports of some high-tech materials to the country.

Japan said Monday it would tighten regulations on exports of materials used in smartphone displays and chips to South Korea amid a widening dispute over compensation for South Koreans who were forced to work for Japanese firms during World War II.

“We are doing a preliminary feasibility analysis (on the investment),” Cho Jeong-sik from the Democratic Party told reporters after meeting with officials from the presidential office and government ministries to discuss a response to Japan’s decision.

The export curbs could hamper production at South Korea’s chip giants Samsung Electronics Co. and SK Hynix Inc., as the two chemicals targeted are essential, analysts say.

Data firm IHS Markit said Wednesday the trade restrictions against South Korea would add to global trade tensions. Asian exporters are already being strained by a prolonged slowdown in the global electronics sectors.

“A reduction or elimination in the availability of these materials will significantly impede the production of memory and other semiconductor chips, impacting major semiconductor manufacturers including Samsung Electronics and SK Hynix,” Len Jelinek, executive director of semiconductor research at IHS Markit, said in a note.

Industry minister Hiroshige Seko said Tuesday that the decision to tighten controls was not in violation of World Trade Organization rules, rebuffing South Korea’s earlier claims.

Cho, the South Korean ruling party lawmaker, shrugged off criticism in local media that the government is not laying out countermeasures swiftly. But he did not provide further details on the nature of the spending.

Shares in South Korean chip materials makers jumped after the government’s spending plan was made public.

Shares of Ram Technology and Ocean Bridge, local firms producing chemicals used in the chip manufacturing process, rose as much as 20 percent and 15 percent, respectively.