Samsung pursues import substitution amid Japan trade dispute

Samsung Electronics, the world's largest memory chip maker, is turning to domestic producers of chemicals for manufacturing processes. File Photo by Jim Ruymen/UPI

Sept. 3 (UPI) — South Korean tech giant Samsung Electronics is adapting to a changing trade environment following Tokyo’s decision to place restrictions on Korea that would affect the nation’s tech exports, including semiconductors, flat-screen TVs and smartphones.

A Samsung source told local news agency Yonhap imported Japanese hydrogen fluoride has been partly substituted with domestically developed chemicals.

Hydrogen fluoride is one of three chemicals that are being restricted under new Japanese export rules. Experts say Japan is enforcing the regulation in response to Seoul’s support for compensation for Korean forced laborers recruited during World War II.

On Tuesday, Yonhap’s Samsung source said new inputs other than Japanese products are being introduced to manufacturing processes.

“We plan to gradually expand from low-sensitivity processes,” the source said, referring to the early stages of a larger business strategy at the world’s largest memory chip manufacturer.

Complete substitution of Japanese chemicals is not likely to take place immediately. According to the report, domestic manufacturers could take three to six months to place hydrogen fluoride into mass production.

Hydrogen fluoride is a key chemical in the etching of circuits during semiconductor manufacturing processes.

Other firms, including Samsung rival LG Display, are using domestic hydrogen fluoride in manufacturing processes.

Bilateral ties between Seoul and Tokyo have declined precipitously since the trade dispute began July 1.

More confusion ensued Tuesday, when officials on both sides disagreed about points discussed at a recent meeting in Seoul.

NHK and Kyodo News reported Takeo Kawamura, a senior member of the Japan-South Korea Parliamentarians’ Union, met with South Korean Prime Minister Lee Nak-yeon.

According to the news reports, Kawamura said Lee asked to discuss with Japanese Prime Minister Shinzo Abe a terminated bilateral military intelligence sharing agreement along with Japanese export restrictions, in order to reach a solution.

Lee’s office denied the reports and said Lee said Seoul would review the termination decision if Japan reverses some of its previous actions, according to South Korean press reports.


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