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Wed, December 6, 2023 | 09:17
Tech
Samsung, SK hynix rush to find new suppliers
Posted : 2019-07-04 17:21
Updated : 2019-07-04 18:38
Baek Byung-yeul
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Samsung Electronics employees check semiconductor fabrication equipment at the company's Hwaseong plant in Gyeonggi Province, Thursday. / Courtesy of Samsung Electronics
Samsung Electronics employees check semiconductor fabrication equipment at the company's Hwaseong plant in Gyeonggi Province, Thursday. / Courtesy of Samsung Electronics

By Baek Byung-yeul

Samsung Electronics and SK hynix have been scrambling to find new supply sources for materials critical to manufacturing chips in response to Japan's export restrictions, industry officials said Thursday.

The Japanese government started to impose tougher restrictions on exports of three items ― photoresist and hydrogen fluoride, also known as etching gas, and fluorinated polyimide ― essential materials for producing semiconductors and displays, beginning Thursday.

Among the three items, photoresist and etching gas are essential for producing semiconductors and Samsung and SK hynix, which account for more than 70 percent of the global DRAM market and 40 percent of the NAND flash memory chip market, are trying to find new supply sources for them.

"The Korean chipmakers are trying to diversify their supply chains for photoresist and etching gas whose world market is controlled to the tune of about 90 percent by the Japanese companies," said a company official from one of the country's two largest semiconductor makers.

"It is almost impossible to find other supply chains for photoresist, which is completely dependent on Japanese makers, but for etching gas, some other companies in Belgium and Korea can replace Japanese players."

Korea says Japan violates WTO rules
Korea says Japan violates WTO rules
2019-07-04 18:00  |  Politics

The official added especially Korean firms such as Soulbrain and Ram Technology are improving their production capabilities for etching gas.

However, Lee Jong-hwan, a professor at the Department of System Semiconductor Engineering at Sangmyung University, said it will be difficult for the chipmakers to diversify their supply chains due to their high dependency on Japanese firms.

"Korean chipmakers are estimated to have about two months of inventories though the period can be different depending on the situation of each company. As chances are high that the Japanese government keeps its restrictions on export of high-tech materials to them, it is natural that the chipmakers are trying to diversify their supply chain," he said.

"But it is not easy for the chipmakers to find alternative supply sources because the current supply chain between the Japanese firms and the Korean chipmakers has been built after a long period of cooperation. If Samsung and SK hynix are running their factories at full capacity, their stock of the chip-making materials will run out faster."

Industry analysts presumed the export restrictions will have a negative impact not only on Korean firms but also Japanese firms.

"Korean companies are the main customers of such materials and are also the key global suppliers of memory chips and display panels," according to Moody's. "The immediate impact of the export controls on the rated Japanese companies, such as Fujifilm and Shin-Etsu Chemical, will be immaterial, because Moody's estimates that their sales of the affected materials to Korea are insignificant relative to their total revenue."

Tokyo's move is seen as retaliation against Seoul's Supreme Court ruling ordering Japanese firms to compensate colonial-era victims of forced labor.

In response, Seoul vowed to take a hard-line approach as its finance minister warned of direct countermeasures against Tokyo if it continues to restrict exports of chip- and display-making materials to its companies.

"We believe the Japanese move is a clear act of economic retaliation," Hong Nam-ki, the minister of economy and finance, said on a radio broadcast. "If the problem is not settled, surely Korea needs to ask the World Trade Organization (WTO) to make a judgment. But as it takes time for the WTO to deliver a verdict, it cannot be the only solution."



Emailbaekby@koreatimes.co.kr Article ListMore articles by this reporter
 
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