South Korea’s Semiconductor Industry Starts to Find Replacements for Japanese Semiconductor Materials

Aug 08, 2019

As Japanese Government is set to remove South Korea from its white list of favored trading partners, experts believe that South Korea has found short-term and medium and long-term solutions for three key semiconductor materials that Japanese Government started regulating in early July. Some believe that Japanese industries will be affected by current regulation once South Korean industries find stability.
High-ranking officials from South Korea’s semiconductor industry said that their industry is almost done preparing a solution for supply of hydrogen fluoride and that none of semiconductor plants will be stopped due to Japanese Government’s regulation.
It is seen that South Korea’s semiconductor industry has secured a solution so that it will not face any issue if it does not import hydrogen fluoride from Japan or lowers amount of hydrogen fluoride imported.
It is expected that it will be Japanese businesses that will be affected the most at the end due to reduced markets.
South Korean industries are dealing with current issue by securing inventories, diversifying suppliers, and localizing products.
It is heard that Samsung Electronics and SK Hynix secured large stocks of Japanese materials right around when Japanese Government enforced its regulation. As a result, they were able to prevent themselves from any immediate setback.
They are planning to diversify suppliers on full-scale starting from end of this month. They saw that replacements for Japanese hydrogen fluoride are possible to use after testing them. “Although final evaluation still needs to be done, replacements will be introduced to their production if there is not any huge issue.” said a representative for South Korea’s materials industry who is familiar with current issue.
Between September and October, hydrogen fluoride that has same purity as Japanese hydrogen fluoride will be mass-produced in South Korea. This is because SoulBrain that has been pushing for localization of key semiconductor materials will be finished with extension of its plant next month. Once its plant is in operation, it will be able to satisfy entire amount of hydrogen fluoride needed by Samsung Electronics and SK Hynix. Because it has technical skill to produce super-high-purity hydrogen fluoride, its hydrogen fluoride can stand toe-to-toe with Japanese hydrogen fluoride when it comes to quality.
Although SoulBrain had imported hydrogen fluoride from Stellar, refined it, and supplied to Samsung Electronics and SK Hynix, it has also accumulated technical skills by purchasing raw material (anhydrous hydrogen fluoride) from Chinese businesses and producing its own hydrogen fluoride at the same time. Other South Korean companies are also preparing to localize hydrogen fluoride (etchant). SK Materials stated that it will supply a sample at the end of this year by localizing gaseous hydrogen fluoride (etching gas).
Although it will be difficult for South Korean companies to localize EUV (Extreme Ultraviolet) photoresist, which is also under Japanese Government’s regulation along with hydrogen fluoride, it is heard that South Korea’s semiconductor industry will continue to bring in necessary amount through other routes. Fluorinated polyimide, which is the third and last semiconductor material under current regulation, can be easily placed due to its low usage.
South Korea’s semiconductor industry ultimately believes that it is Japan who needs to worry as it has prepared short-term to long-term solutions regarding Japanese Government’s regulation.
“By end of this year, we can completely remove hydrogen fluoride that comes from Japan.” said a high-ranking official for the industry. “Although there is a chance that Japanese Government will lift its regulation to minimize any effect on its businesses, South Korean semiconductor companies will continue to lower percentage of Japanese materials used for their production.”
Foreign media also believes that Japanese semiconductor material manufacturers will face more burden as South Korean companies continue to localize materials and diversify suppliers.
“Although South Korean companies will be threatened from Japanese Government’s pressure, Japanese companies will also suffer huge damage.” said a Japanese columnist on EE Times Japan. “It is as if Japanese Government is digging its own grave.”
“Japanese Government’s regulation will have limited impact on South Korea’s semiconductor industry.” said Toyo Keizai. “It is concerning to see that production system of hydrogen fluoride being built in South Korea.”
Japanese Government introduced revised Export Trade Management Decree that removes South Korea from its white list of trade favored partners and detailed enforcement regulations ‘blanket permission handling method’ on the 7th.
Initially, it was expected that there would be additional damage as blanket permission handling method decides which item out of 1,100 strategic materials will require individual approval. However, Ministry of Economy, Trade and Industry (METI) of Japanese Government did not add a list of exports that require individual approval to its blanket permission handling method that was uploaded on its homepage.
As Japanese Government did not designate additional items that would require individual approval, there are not other companies aside from semiconductor companies that will be directly affected by Japanese Government’s economic retaliation. “Because Japanese Government is operating its system within a large framework of removing us from its white list, we need to closely analyze detailed information and see if Japanese Government enforces additional regulations in the future.” said a representative for Ministry of Trade, Industry and Energy.
Meanwhile, it is heard that South Korean Government will hold a ministers meeting on the 8th to discuss about how it will deal with Japanese Government’s regulation and look into removing Japan from its ‘white list’.
Staff Reporter Yun, Geonil | benyun@etnews.com & Staff Reporter Kang, Hyeryung | kang@etnews.com

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