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Japan’s curbs on high-tech materials and of the exports to South Korea could be counter-productive

TOKYO/SEOUL (Reuters) – Japan’s curbs on exports of high-tech fabrics to South Korea, it would have a detrimental effect on the long-run, undermine its dominance as a key link in the global chip supply chain, vendors, suppliers, and experts have to say.

FILE PHOTO: a Mobile memory chips are made by chipmaker SK Hynix can be seen in this picture illustration in Seoul, south korea, May 10, 2013. (REUTERS photo/Lee Jae-Won/an Illustration/File Photo/File Photo

Japan has tightened the restrictions last month, at the output of the three chipmaking materials from South Korea, the home of the memory chip of the titans, Samsung (005930.KS) and SK Hynix (000660.ME), there is a risk of disrupting the global tech supply chain supplies about 70% or more of the products shall be limited to all of the world.

When you move on to the highlights of Japan, Inc. strong place in the industry, even if the once-mighty giants like Sony (6753.T) has lost a skillful, Chinese, and Korean rivals, but it has led to some concern that the control over the niche in the market for fluorinated polyimides, photoresists, and the hydrogen fluoride can be loose.

“South Korean companies are swimming in quality and stable power supply as the reasons for choosing the Japanese-made materials. But it also made them aware of the need for change, and they are taking action,” a source at one Japanese material supplier, said:.

“This came as a blow.”

Samsung, for example, has performed a test on a non-Japanese photoresists, and hydrogen fluoride, there are several sources familiar with the chip’s supply chain, he said.

Soulbrain (036830.K-q), a supplier of hydrofluoric acid at the Samsung and Hynix, the world’s No. 1 and No. 3 chip vendor, has been focused on the matching of the purity of the Japanese hydrogen fluoride in a plant that is under construction.

The Experts from the industry, and keep in mind, however, that it would take some time for Korean companies to move up the value chain in the high-tech material is not easy to replicate.

The japanese suppliers, “are built up in the decades-long experience in the development of products,” Atsushi Ikeda, Citigroup analyst, said.

“The build-up is just too great for new players.

The Top photoresist supplier, and Tokyo Ohka Kogyo (4186.(T) said that it may take up to two years, with the development of new resistance.

“RARE EARTH-SHOCK

In South Korea, the uprisings have been most likely to elicit a response similar to Japan’s in the “rare earth shock”, about ten years ago, when China’s restriction of exports of rare-earth minerals used in electronic devices have forced Japan Inc. to find an alternative supply, industry participants said.

“Under the circumstances, anyone would have done,” said a source at the Japanese supplier, which has been hit by the curbs.

Seoul, korea, has been committed to the funds, the internal chip supply chain, to accelerate the development of the knowledge, which is necessary for the companies to catch up in some of the more advanced fields.

As a senior executive at Soulbrain, said the government had expedited the paperwork so that the new plant could be completed faster.

Soulbrain is looking to complete construction by the end of September, and to carry out tests to see whether or not it can be in the mass, and to produce high-purity hydrogen fluoride, said the company.

In photoresists, Samsung is trying to curb its dependence on Japan for high-end equipment, even though the sources say it faces high hurdles. The company, however, makes use of material from the supplier Dongjin Semichem (005290.K-q) for the photoresists used in the chips, with less of the finer circuit patterns, a Japanese supply-chain sources said.

Only three Japanese companies, Tokyo Ohka, JSR (4185.The Shin-Etsu Chemical (4063.(T), which is currently providing high-quality materials, and advanced chip-manufacturing technology known as extreme ultraviolet lithography around the world.

EFFECTS

Tokyo Ohka, and other materials for makers, it grew hand-in-hand with the electronics companies, NEC (6701.(T), And Toshiba (6502.(T) and Hitachi (6501.(T), the world’s top chipmakers in the late 1980’s.

The Japanese chipmakers lost ground to South Korea, the providers have continued to grow, thanks to the onset of the attack, in overseas markets, and the strength of their supply chains.

However, in the wake of the last of the pavement, prompted by a decades-old row between the Asian nations over compensation for forced Korean laborers in Japanese companies during world War ii, the suppliers in Japan have to deal with the consequences, out of the three, prohibited material, industry sources said.

Korean chipmakers are now asking for the Japanese suppliers, on the front end-responsible for deliveries of materials to Japan, it has a large market share of silicon wafers to the polishing slurries, for fear of further restrictions, the sources said.

The japanese suppliers have so far refrained from directly commenting on how to curb the impact it will have on their company, they claim they had no idea of the government making the decisions ahead of time.

“We have a very good relationship with our Korean clients,” said I Ohhashi, a spokesman for Tokyo Ohka.

“But this is politics.”

Reporting Makiko Yamazaki, and Heekyong Yang; Additional reporting by Linda Sieg in TOKYO and Ju-min Park in SEOUL; writing by David Dolan; Editing by Miyoung Kim and Himani sarkar

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