It has been ten days since Japanese Government started regulating exportation of three important semiconductor and display materials. Due to Japanese Government’s sudden measure, South Korean industries and South Korean Government were in a state of great distress. Some uncertain information had caused confusion within relevant industries. South Korean semiconductor manufacturers have inventories of materials that will last about two weeks and they are concerned that they may have to stop operating some of their production lines shortly. However, confusion has begun to settle and Japanese Government’s intent is beginning to be clearer as well. Many voice their opinions by saying that both private and public sectors need to be calm as there is a growing possibility that this issue will be prolonged.
◊Japanese Government’s regulation does not target vital point of South Korean industries
Japanese Government regulates photoresist, high-purity hydrogen fluoride, and fluorine polyimide. Because all three of them are materials that are used in semiconductor and display production processes, many initially believed that Japanese Government was trying to target South Korea’s main industries. However, as South Korean Government started to dig deeper into Japanese Government’s intent, it came to believe that Japanese Government was not trying to target its ‘vital point’.
Prime example is photoresist. Out of photoresists that are regulated by Japanese Government, ones that are drawing most interests are photoresist that uses wavelengths of light between 15nm and 193nm and photoresist that uses wavelengths of light between 1nm and 15nm. Photoresists that use wavelengths under 1nm are photoresists that are used during EUV (Extreme Ultraviolet) lithography process.
However, there are different interpretations towards photoresist that uses wavelengths of light between 15nm and 198nm. While some within academic circles believe that ArF (Argon Fluoride) photoresist that is mainly used during memory manufacturing process by Samsung Electronics and SK Hynix is included to Japanese Government’s list of regulation, some within semiconductor and display industries believe that ArF photoresist is not included as it uses wavelength of 193nm.
Because ArF photoresists have been regularly imported by South Korean businesses even when Japanese Government enforced its regulation on the 4th, it is confirmed that the regulation is limited to EUV photoresist.
South Korean industries have begun to wonder why Japanese Government is only regulating EUV photoresist and not ArF photoresist because it should have included ArF photoresist to its list of regulation if it wants its regulation to affect South Korea’s semiconductor industry.

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<Panoramic view of Samsung Electronics’ foundry plant in Hwaseong (Reference: Samsung Electronics)>

◊Japanese Government’s regulation carefully targets South Korea
Fluorine polyimide is also expected to have less impact than initial concern that industries and South Korean Government had. Samsung Display and LG Display recent sent letters to their main customers and informed that fluorine polyimide, which was included by Japanese Government to its list of regulation, would not have impact on actual production and supply of their products.
However, it seems that South Korean industries need an immediate solution for high-purity hydrogen fluoride situation. Because current production processes are optimized for Japanese materials, it is difficult for South Korean businesses to replace Japanese hydrogen fluoride with other hydrogen fluoride. From South Korean businesses’ perspectives, securing stocks of Japanese hydrogen fluoride is the primary task that they need to do. However, because it is not impossible for them to find replacements, it is likely that they will ultimately look for hydrogen fluoride elsewhere if it comes to stopping their plants due to shortage of Japanese hydrogen fluoride.
Major concern is why Japanese Government left a ‘room’ for South Korean businesses and South Korean Government to breathe. It seems that this is Japanese Government’s negotiation tactic to adjust intensity of its regulation depending on South Korean Government’s reaction.
“Because Japanese Government will be in a difficult situation if its regulation were to affect ICT (Information Communication Technology) market globally, it seems that Japanese Government only picked areas that would be sensitive to South Korean industries and not other countries.” said a high-ranking official from the semiconductor industry.
Because ArF photoresist is used by South Korean semiconductor manufacturers that are responsible for more than half of global memory market while EUV photoresist has just begun to be incorporated, it would have been burdensome for Japanese Government to regulate ArF photoresist.
Actually, there was a hint of Japanese Government considering regulating ArF photoresist until the last moment. According to the list of regulated items downloaded from the homepage of Ministry of Economy, Trade and Industry of Japanese Government on the 3rd of July, photoresist that uses wavelength between 15nm and 245nm is included in the list. This indicates that Japanese Government was initially planning to regulate ArF photoresist. However, the term ‘245 nm’ was changed to ‘193nm’ on the following day.
Fact that Japanese Government is only regulating these three materials and that it is only making approval procedure for exportation more complicated supports an interpretation that Japanese Government is only strategically pressuring South Korea.
◊South Korea prepares to have a long-term battle against Japan
Reason why South Korean industries and South Korean Government cannot just depend on optimistic views is because Japanese Government is beginning to increase intensity of its pressure on South Korea. During a meeting between South Korea and Japan that took place on the 12th, Japan reiterated its stance that it would exclude South Korea from its list of ‘white countries’.
South Korean Government believes that it will be excluded from the list starting from the 22nd of August.
This measure will have significant impact as it will include 1,112 items such as major materials that are used for semiconductor, display, and machine tool to the current list of items that are under regulation. It is an issue that will affect entire manufacturing industry in South Korea and global supply network of major industries in the world.
South Korean Government is preparing to have a prolonged war with Japanese Government. President Moon Jae-in mentioned for the first time that Japanese Government’s regulation on exportation of Japanese materials during his meeting with CEOs who are in their 30s that took place on the 10th. He emphasized that even though his office is doing its best to solve this issue diplomatically, they need to prepare for all possibilities.
18th of July will be the day when South Korean Government and South Korean industries will be able to find out Japanese Government’s attitude on its recent measure. This day is the last day for South Korean Government to give its response towards ‘formation of an arbitration committee by three countries’ regarding forced labor that was proposed by Japanese Government. If South Korean Government does not provide a definite answer, Japanese Government can enforce additional sanctions.
Many representatives from semiconductor and display industries stated that three materials that are currently under regulation are only the beginning of what is to come in the future and they predict that Japanese Government will eventually remove South Korea from its list of white countries.
Staff Reporter Yun, Geonil |