Japan to tighten export rules for high-tech materials to S Korea

sK got what they were asking for. Hope they don't choke on it.

This measure is not a ban on exports to South Korea. If South Korea sues the WTO, it will not be treated as a lawsuit. Japane just canceled the preferential treatment of the export procedure. It has been excluded from being treated as a state with no security problems in Japan's trade(White List or White Country). In summary, Japan states that South Korea has partnered with enemy forces and will not trust it in the future. Korea will have difficulty doing business and Japan does not help Korea no matter what happens. Really stupid South Korea. For now, try your best.

The affected Korean firms are puzzled why Japan is doing this, since they could easily be sourced from other non-Japanese suppliers. The only thing that would affect is cost. The only reason Koreans bought from Japan was because of order turnaround speed, not because they could only be sourced from Japan.

The affected Korean firms are puzzled why Japan is doing this, since they could easily be sourced from other non-Japanese suppliers.

Auhh, no since Japan has virtual monopoly over the items listed and other suppliers are already maxed out in supplying other companies so they will not be able to comply with other demand on short notices.

Basically the LG and Samsung will be deprived with the essential products in developing their products resulting to a severe blow to SK economy as a whole.

@Triring

Auhh, no since Japan has virtual monopoly over the items listed

Duh, 70% is not 100%.

As for the fluorinated polyimide used in flexible OLED, guess what? Koreans make 99% of global output and the Japanese supplier will be driven out of business. The Korean vendor that supplied 10% of fluorinated polyimide's global market will now have to work overtime and watch its stock value soar.

and other suppliers are already maxed out in supplying other companies so they will not be able to comply with other demand on short notices.

LOL, you don't understand supply and demand. If Korean companies pay top dollars, then all available supplies go to Korea, it is as simple as that.

Samsung and LG's official response is that they do not rely on single supplier for all their material, so they will get by.

This is basically a suicide decision by Abe san based on overestimation of Japan's importance, this will hit the Japanese fluorinated polyimide vendors especially hard because Korean display vendors were practically all their sales base. Remember that Japan doesn't have an OLED industry of its own anymore.

Pity these two countries cannot resolve these small quarrels. Maybe we need another Trump and Kim in South Korea and Japan. Where’s their maturity?

Japan allowed the information on this measure to be leaked intentionally to South Korea in advance. Therefore, the South Korean government should have understood it. The purpose is to exclude South Korea from the whitelist. As a result, Japan does not make any guarantees in South Korean transactions. South Korea will find out what the untrustworthy transaction is.

 If Korean companies pay top dollars, then all available supplies go to Korea, it is as simple as that.

Please do your best and settle for "dollar". Perhaps "Won" will not sell.

@Travelmaster

South Korea will find out what the untrustworthy transaction is.

You don't get it. Koreans never considered Japan to be a reliable supplier and always had contingency plan for anything sourced from Japan, because of Japan's Tsunami and Quake risks potentially halting supplies even before this latest round of political risks.

Accordingly, Koreans keep multiple suppliers for all their raw materials, so that the Korean chip and OLED plants can go on even if Japan was struck by a 100 year mega-quake(The last one hit Tokyo in 1920, so the next one is due now) due anyday now.

This is why Samsung and LG are making a confused face, because they are fully prepared for Japan being washed away by a mega-Tsunami and halting all raw material production, so Abe san can't stop Koreans from running their plants.

Trade wars are in vogue.

Will it achieve it's intended effect, i doubt it because it can easily be circumvented.

@Samit Basu

Don't you misunderstand? The three material export measures and the expulsion from the white list are not the same story. The white list applies to all exports in South Korea.

I can't wait for what's next from either sides.

@HillClimber

The proof is in the stock market

LG and Samsung shares aren’t moving. Investors and analysts have brushed this off as non-event since there are plenty of alternate suppliers

Share prices of local suppliers for three materials are soaring since their order bookswill increase massively.

Samsung and LG have used material from multiple suppliers simultaniously.

Oh, LG Display justannounced they never used Japanese material and is unaffected by

Sorry, I was typing from my phone. My apology for typos.

LG Display just announced they are unaffected by this action, because their OLED is Japanese material free. It shouldn't be too hard for Samsung to go completely Japan-free since Samsung was using Japanese material for pricing reason only and can completely switch over to domestic suppliers if necessary, as LG has demonstrated.

Hydrogen Floride is a non-issue as well, since there are three domestic suppliers and this item is 100% covered.

The only item that might run into shortage is Regist.

……. A play from Orange Man's playbook maybe...…...

If you are talking about FEM Technology Co., Ltd., then good luck since they are owned by Morita Chemical which is providing the core technology. No Morita no fluorochemicals.

act like an obnoxious chihuahua will eventually get stomped like one!

Japan will tighten curbs on exports of high-tech materials used in smartphone displays and chips to South Korea .....

South Korea will just get them from somewhere else.

Trade War for political clout. How very pathetic Shinzo!

South Korea will just get them from somewhere else.

of much higher price and poor quality.

@Samit Basu - the pro-Japan crowd here don't want to know or hear about any of what you're posting. They only want to hear that this spells the end for SK and will be on its knees begging Japan to reconsider.

I'm guessing the number of downvotes this post gets will be the percentage drop in 3 months of share values of Japanese suppliers of these materials to SK. This move will hurt Japan more than it does SK. Let's see who will be proven right.

Japan and korean goverment should not lock themselves from zero-some game.

"The South Korean side is strongly opposed to violate the World Trade Organization (WTO) rules."

If you're not bothered, why are you repulsed? Japane just canceled the preferential treatment of the export procedure. For Japan, South Korea has the same rating as China. What's the problem with this? :)

Speaking of which, there are very unique people. Do you judge whether the stock price is the truth or the lie? Are you a gambler?

@Heckleberry & @Samit Basu

This is a big present. Samsung side news.

https://news.naver.com/main/ranking/read.nhn?mid=etc&sid1=111&rankingType=popular_day&oid=008&aid=0004241638&date=20190701&type=1&rankingSeq=6&rankingSectionId=101

This is a big present. Samsung, SK Hynix side news.

http://biz.chosun.com/site/data/html_dir/2019/07/01/2019070101463.html

Good news. Hit SK where it will hurt them by depriving them of Japanese technology. Also, I hope a strict cap is put on SK tourist visas granted. These measures will hopefully make the crooked Moon regime realize they must stop attacking Japan for political gains.

of much higher price and poor quality.

Old Hat

As Japan exits Korea, China steps in. They can make these things. Korean companies can too, but they are probably too busy already (the reason they outsourced to Japan). Bad move, Japan!

70~90% of world-wide share should not be discounted that simply. Lol. If those can be such easily replaced

at the same price with same qualities, such share wouldn't be achieved in the 1st place.

Especially S.K companies wouldn't have relied upon Morita-Kagaku co. Stella Chemifa co that much.

All the war reparations were paid in full decades ago. South Korea is trying to blame Japan for all their woes when really it is SK Corporations raking in Billions while they screw their own people.

Mr. Abe trying desperately to appeal to his remaining support base, by making-believe Japan still controls Korea. Wake up, Shinzo, you're decades out of date.

Bu ha ha not hesitate to file the case to WTO? How about facing Japan at ICJ beforehand?

@Travelmaster

If you're not bothered, why are you repulsed? 

It is obviously diplomatically unacceptable for one country to appear to be under the sanction of another country regardless of how ineffective it is.

Do you judge whether the stock price is the truth or the lie?

The stock price is the market perception of a listed company's well-being. The market has judged that Samsung, LG, and SK Hynix will come out mostly unharmed due to availability of alternate supply sources.

@Ganbare Japan!

hope a strict cap is put on SK tourist visas granted.

Koreans don't need a tourist visa to visit Japan. 

threaten to impose a ban on ALL Japanese produce, food and sake to SK if crooked Moon does not back down.

I am pretty sure Koreans won't feel a thing even if all Japanese food is banned? 

@Ex_Res

of much higher price and poor quality.

It is not of poor quality, but the price that drove sourcing decisions. Japanese suppliers generally offer the cheapest prices due to their economy of scale, while Korea's domestic vendor's prices were higher. But in this case, obtaining necessary material of sufficient quantity isn't an issue, it is just that the cost will be higher.

Anyhow, share prices of Korea's domestic manufacturers of three affected materials rose 16% to 5% yesterday due to the expectation that their order book sizes will double to triple to make up for shortfall from Japan.

@showchinmono

70~90% of world-wide share should not be discounted that simply. 

70~90% of worldwide share doesn't translate to 70~90% share of Korea's domestic market, it's much lower in Korea due to multiple sourcing strategy.

Whoever made this decision at Japanese government misunderstood that 70~90% global market share didn't translated into Japanese vendor's market share in Korea. If they knew Japanese producer's market share was much lower in Korea and could easily be substituted, then they wouldn't have made this bone-headed decision.

But this is the same Japanese bureaucracy that selected the AEGIS ASHORE deployment site from Google Maps and discovered the selected site was unsuitable only after making the announcement and actually visiting the site.  

And it begins. South Korea has brought this on themselves by playing political games with their court system.

Maybe they can replace the suppliers with non-Japanese ones, maybe they cant. But if they can, anyone with half a brain that has ever worked in a supply chain can tell you, it's still going to cost a lot and be very painful to the bottom line.

@extanker

But if they can, anyone with half a brain that has ever worked in a supply chain can tell you, it's still going to cost a lot and be very painful to the bottom line.

The difference is that Koreans always kept multiple suppliers of same materials and used them simultaneously, so shifting supplier isn't impossible.

Let's take an example of Regist, said to be the most difficult material of three to replace suppliers.

There are three Korean Regist suppliers, plus one Japanese supplier with a factory in Korea.

Samsung and SK Hynix used Regist from multiple suppliers, but each product tended to be line specific, and switching supplier requires a test run with new supplier's material to validate. Yes, it is not risk proof, but it can get the job done.

Fortunately, the 7 nm EUV process(The most advanced process in production today) used with Regist from a Japanese supplier's Korean factory and this won't be affected at all.

70~90% of worldwide share doesn't translate to 70~90% share of Korea's domestic market, it's much lower in Korea due to multiple sourcing strategy.

Whoever made this decision at Japanese government misunderstood that 70~90% global market share didn't translated into Japanese vendor's market share in Korea. If they knew Japanese producer's market share was much lower in Korea and could easily be substituted, then they wouldn't have made this bone-headed decision.

It’s Korean media that reporting their dependency ratio on made-in-Japan is 90% for 2 out of those 3 items, Resist and HF. 5%~16% of stock upward movement wouldn't translate to that Korean vendors could provide the same qualities. Anyway, Good luck, if it is not case.

I understand that your claim is on the South Korean side. Sorry, your claims are not accepted in the WTO. It is not sanctions, but evaluation. South Korea is recognized as an outlaw country that has ignored Japan's treaty, and its rating has been changed to be the same as China and Russia. In other words, it changed from special treatment to general treatment. If you want to import, do a formal procedure. These procedures require at least 90 days. Of course, only when there is no defect in the procedure. It is not limited to this if there is a flaw in the procedure. News reports that Samsung and SK Hynix are puzzled. Please recognize the reality. Don’t be so naive. Thank you.

The difference is that Koreans always kept multiple suppliers of same materials and used them simultaneously, so shifting supplier isn't impossible.

Did I say it was impossible? No. But if you think that a company just snaps it's fingers and simply starts receiving massive supply shipments from an alternative source, whether or not they have the source already lined up, without any delays or extra costs, you simply do not have any understanding about how supply or manufacturing works.

Highly unimaginative Abe san. These kinds of geopolitical issues spilling over into the corporate sphere is becoming the norm, I would have thought the response should have been designed to tear strips off Moon, not SK companies.

@Triring July 1  10:15 am JST

Basically the LG and Samsung will be deprived with the essential products in developing their products resulting to a severe blow to SK economy as a whole.

It is exactly like kamikaze attack, which Japanese military strategists hopefully believed could be effective, but just proved to be suicidal in the long-term. You already see it.

In Tokyo, shares of resist maker JSR and fluorochemicals maker Kanto Denka Kogyo plunged.

I'm curious, will Japan loosen the export rules if SK realizes that they've screwed up and try to offer to mend ties with Japan? Possibly throwing in 'lifiting the Fukushima food ban' offer as well?

With the current Moon administration, I know that the chance of SK performing ANY meaningful diplomatic exchanges are close to nil but still, I'd hope that there are some rooms left for negotiations for both countries.

All in all, Moon and his left-leaning cronies are doing more harm than good. It's sad to see that they're living in their own bubbles and not thinking outside the box and for the future of SK.

@chococya96

I'm curious, will Japan loosen the export rules if SK realizes that they've screwed up and try to offer to mend ties with Japan? Possibly throwing in 'lifiting the Fukushima food ban' offer as well?

I will illustrate from a prior example. In 2016, Sharp suddenly cut off LCD screen shipment to Samsung under the order of Foxconn CEO Terry Gou. Samsung makes high-end screens itself but buys low-end screens from others, and it was Sharp that was supplying low-end screens(By Samsung standard) to Samsung until then.

About a month ago, Sharp asked if Samsung wanted to buy from them again, since Terry Gou became distracted from day-to-day operation of Sharp because he was running for Taiwan's presidency. Samsung's answer was an immediate no, Sharp became an untrustworthy supplier and Samsung would never do business with Sharp again.

Japanese suppliers that will do whatever it takes to eliminate the political risk, by establishing factories in Korea will keep their Korean business. Those who do not will simply be marked as untrustworthy and be replaced permanently.

But if the war will occur in Korean Peninsula, The U.S. forces will go to the battlefield from Okinawa. And Japan will be jeopardized so much. 

You do not understand how the world is changing. The reason for the retaliatory action being officially announced is that the United States acknowledged that it does not require South Korea. Japan has definitely obtained US consent under the G20. In the near future, US troops will withdraw from South Korea. The reason why the US-Japan defense relationship has been restructured can be easily imagined. Simply put, Samsung will survive even if South Korean dies.

Koreans don't need a tourist visa to visit Japan. 

Fine. Then simply cut to half the number of tourists entering Japan on a SK Visa.

In Tokyo, shares of resist maker JSR and fluorochemicals maker Kanto Denka Kogyo plunged.

Plunged?

Don't look that way.

https://www.google.com/search?q=jsr+%E6%A0%AA%E4%BE%A1&rlz=1C1GCEB_en&oq=JSR+&aqs=chrome.1.69i57j0l5.5998j0j8&sourceid=chrome&ie=UTF-8

https://www.google.com/search?rlz=1C1GCEB_en&ei=46QaXfb-CM788AX_mK4o&q=%E9%96%A2%E6%9D%B1%E9%9B%BB%E5%8C%96%E5%B7%A5%E6%A5%AD%E3%80%80%E6%A0%AA%E4%BE%A1&oq=%E9%96%A2%E6%9D%B1%E9%9B%BB%E5%8C%96%E5%B7%A5%E6%A5%AD%E3%80%80%E6%A0%AA%E4%BE%A1&gs_l=psy-ab.3..0i4i37i70i250j0i4i37.54720.66808..67591...1.0..3.422.6153.0j18j8j1j2......0....1..gws-wiz.....10..0i71j35i39j0i4j0i67.4_23_plVUu4