SEOUL — The South Korean government plans to invest 1 trillion won ($854.76 million) annually to develop semiconductor materials following Japan’s tightening of rules for tech materials exports to its neighbor, a senior official of South Korea’s ruling party said.
The intensive investment in the development of chip materials, parts and equipment is apparently aimed at speeding up efforts to domestically source components vital to chip-making that South Korea has been heavily dependent on Japan for.
Japan’s tougher export rules could deal a crippling blow to chip and display makers such as Samsung Electronics Co. and SK Hynix Inc., which together account for a significant share of South Korean exports.
The Democratic Party of Korea official said the South Korean government plans to announce details of the plan by the end of July.
The Japanese government said Monday it is toughening rules for the export to South Korea of materials used to make smartphones and display screens, citing “significant damage to the relationship of mutual trust” between the countries.
Starting midnight Wednesday, Japanese companies are scheduled to be required to file individual applications with their government for permission to export to South Korea three types of materials — fluorinated polyimide, hydrogen fluoride and resist.
Ties between Japan and South Korea have sunk to their lowest point in years following South Korean Supreme Court rulings last autumn ordering Japanese companies to compensate Koreans for wartime forced labor.