Japan is reportedly not planning to ban exports of chemicals used by South Korean semiconductor manufacturers, following the imposition of trade restrictions as of 4th July 2019. Japan has removed South Korea from a list of countries that receive preferential trade treatment when importing fluorinated polyamide, photoresists and hydrogen fluoride (HF) etching gas, meaning Japanese suppliers will have to apply for approval for each individual shipment they send to South Korean customers, which could take up to 90 days. Major memory-chip producers Samsung Electronics and SK Hynix are understood to be almost entirely reliant on Japanese imports of these materials, but the Japanese government has suggested that licenses will be issued for non-military importers such as these.
Japan has implied that the move is related to concerns over North Korean access to chemicals such as etching gas, whilst South Korea claims that the restrictions are politically motivated following a 2018 South Korean supreme court ruling that two Japanese companies must pay compensation to Koreans for forced-labour in the first half of the 20th century.
It has also reported that Korean manufacturer LG Display has been testing Chinese and Taiwanese material as a substitute for Japanese imports. The company noted that display manufacturers use less hydrofluoric acid than semiconductor producers and claimed that there was no cause for concern over the potential impact of restrictions on the company’s production of OLED panel and rollable TVs.
High purity HF is a key chemical used by the electronics industry in the manufacture of semi-conductors and printed circuit boards as a result of its ability to attack silica (SiO2). It is employed in cleaning agents and etchants and is thus an important feedstock in the production of devices such as TVs, computers, memory chips, tablets, mobile phones and critical electronic systems in transport and infrastructure. Although it has been suggested that Korean Imports will not be blocked, the time-delays associated with approval requests and the ongoing uncertainty surrounding Japanese-Korean trade relations likely has the potential to cause some disruption. Whilst HF is manufactured in large volumes globally and is the starting point for essentially the entire fluorochemicals industry, the number of producers of electronic-grade HF and its derivatives is much more limited with Japan being one of the most important suppliers. As such, the ability of downstream semiconductor manufacturers to change suppliers of suitably high-grade feedstocks at short notice may be somewhat limited.