South Korean electronics companies reaffirmed this week that production of computer memory and displays could be disrupted because of ongoing trade dispute between the country and Japan. Both SK Hynix and LG Display said that they were looking towards expanding the network of suppliers they use in acquiring three crucial materials required for product manufacturing.
Having started on July 4, Japanese producers must now get approval for individual exports of polyimides (used both for LCDs and OLEDs), photoresists, and high-purity hydrogen fluoride (used to make chips, such as LSI, DRAM and NAND devices) to South Korea. These export reviews may take up to three months, whereas South Korean producers usually only keep one to two months' worth of materials in stock because they are highly toxic and uneasy to store. Meanwhile, Japanese companies — JSR, Showa Denko (SDK), and Shin-Etsu Chemical — control 70% - 90% of the global supply of these chemicals, and if they cannot supply materials to their South Korean partners on time, production of 3D NAND, DRAM, LCDs, and OLEDs at LG, Samsung, and SK Hynix will be disrupted.
Polyimides, photoresists, and high-purity hydrogen fluoride are produced not only in Japan, but also in South Korea as well. However ramping up local production on short notice to satisfy the demand from the South Korean giants is pretty hard. Meanwhile, both LG Display and SK Hynix are looking towards other vendors simply because they have no other choice.
Speaking about the matter yesterday to investors and financial analysts, Jin-Seok Cha, the executive vice president and head of finance and procurement at SK Hynix, stated:
“We are trying to secure inventories of chip materials as much as possible ... but we cannot rule out production disruption if Japanese export controls drag on, so we are keeping a close eye on that.”
Executives from LG Display also confirmed earlier this week that the company intended to procure required chemicals from different suppliers
Switching suppliers of chemicals is an uneasy task, and it is also hard for producers to ramp up production quickly. Considering the vast production capacities that the South Korean chaebols run in the country and their requirements for supplies, it remains to be seen whether they can get enough to keep their plants running at full capacity.
Earlier this week South Korea failed to gain support from the World Trade Organization in its dispute with Japan. The latter plans to remove South Korea from the 'white list' of countries that have minimum trade restrictions, which will make life of Korean manufacturers even harder.
Related Reading:
- Supply of DRAM, NAND & Displays Could Be Disrupted by Japan & South Korea Dispute
- Samsung Samples 32 Gb DDR4 Memory Chips
- SK Hynix to Start Using 2nd Gen 10nm-class DRAM Process Technology in 2H 2019
- Samsung Develops Smaller DDR4 Dies Using 3rd Gen 10nm-Class Process Tech
- Micron’s DRAM Update: More Capacity, Four More 10nm-Class Nodes, EUV, 64 GB DIMMs
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