By Kotaro Hosokawa, Ten Umekuni, staff writers
Since the Japanese government tightened restrictions on exports to South Korea, Korean corporations accelerated a search for alternatives to Japanese components. The Korean makers of semiconductors and liquid crystal panels (LCDs) have determined that a quick switch to domestic production of high-purity hydrogen fluoride is not possible, and the companies have begun a shift to a domestically procured, low-purity alternative. The hydrogen fluoride is indispensable for production of semiconductors and LDSs. Until recently, Korean manufacturers had been using Japanese supplies to avoid yield loss. Global manufacturers of LCDs and semiconductors have long used Japan’s advanced materials for their quality and price as well as for the stability of supply. The recent change in Korean corporations’ procurement policy is affecting the bottom lines of Japanese material manufacturers.
The South Korean government is also encouraging foreign manufacturers to build plants in the country. American chemical manufacturer DuPont announced a plan to establish a plant in South Korea to produce EUV resists, the export of which has been restricted under the export controls. The Korean government offered support for the company’s move and encouraged investment by reducing the corporate tax and securing land for factory workers’ residences.
A Japanese businessman was told by his Korean counterpart, “Japan’s ranking as a destination of procurement for Korean companies is declining.”
The Japanese Ministry of Economy, Trade and Industry has defended its position, saying, “Inappropriateness on the part of South Korea undermined our trust in it. That is why we reevaluated export controls.” The Koreans continue to view the move as “economic retaliation.” The standoff between the two governments is taking a toll on Japanese manufacturers. (Abridged)