Amidst the ongoing trade conflict between Japan and South Korea, there is some good news to close the week out. The Japanese Ministry of Economy, Trade and Industry has approved a new shipment of industrial chemicals to South Korea, which the latter country's high-tech manufacturers rely on for the ongoing production of processors and other components. This is the first of shipment to be approved since early July, when a diplomatic conflict between the two countries broke out. If South Korean manufacturers get the materials on time, it will help to avoid a painful disruption in the manufacturing and shipping of various tech components, including DRAM, NAND flash, LSI chips, and display panels.

Starting as of early July, Japanese producers must now get approval for individual exports to South Korea 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). The major Japanese manufacturers — JSR, Showa Denko (SDK), and Shin-Etsu Chemical — not only control the lion’s share of the global supply for these chemicals, but they also are among the only suppliers that can meet the quality needs that companies like LG, Samsung, and SK Hynix have built their manufacturing lines around.

Export reviews in Japan may take up to three months, whereas South Korean makers typically only keep one to two months' worth of materials in stock because they are highly toxic and uneasy to store. Luckily, the first individual exports was approved by the ministry in about four weeks. The review by the officials concluded that the shipments will not be used for military purposes. However, the ministry did not disclose what specific chemicals are set to ship. Presumably, the South Korean giants will get their needed materials shortly.

Here is what trade minister Hiroshige Seko told local journalists.

“Usually we do not make an announcement when any single export is approved. But in extraordinary circumstances, in which the South Korean government unjustly called our measures an export ban, we decided to make an announcement.”

One thing to keep in mind is the starting from July all individual exports from Japan to South Korea will have to be approved separately, which means these shipments will have to pass export review procedures every few weeks.

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Source: The Japan Times

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  • R0H1T - Friday, August 9, 2019 - link

    Does that mean we can finally get super cheap high speed RAM? Or will we get another round of contradictory statements telling us why this or that memory (or NAND) maker had to raise prices 😑
  • limitedaccess - Friday, August 9, 2019 - link

    There was only a short term spot price spike when the news was initially released that Japan would be reviewing shipments. The much larger contract market was not affected. All forecasts were still that supply would outstrip demand and the pressure would still be downward.

    The initial news was also being misinterpreted. Japan was never banning shipments to SK. They were simply going to review all shipments to SK like they do elsewhere. Japan up to then had a specific agreement with SK to no need to go through the normal export steps.

    Lastly the actual impact of those specific chemicals on the manufacturing process for DRAM and NAND was also over stated.

    If you mean Samsung B-Dies when saying high speed ram the issue there is that it's EOL.

    The power loss to Toshiba/WD had a larger impact on NAND prices, albeit only slowing the fall in the short term.

    Upcoming trade tariffs will have a larger impact on pricing in the US (and by extension Canada) than the above.
  • grant3 - Friday, August 9, 2019 - link

    Memory prices have been on a downward trajectory for months and yet someone always has to scream conspiracy theory claiming the opposite is happening
  • UltraWide - Friday, August 9, 2019 - link

    "...companies like LG, Samsung, and SK Hynix have build their manufacturing lines around."

    Correct tense is built not build.
  • DanNeely - Friday, August 9, 2019 - link

    Long term I suspect this will work out even worse for Japan than Trump's on again off again death sentences against Chinese phone makers will for the US. In the short term having a sword of Damocles hanging over your rivals heads is useful leverage. Longer term, China already has national goals around high tech self-sufficiency; these threats are only going to encourage them to accelerate the process. And while South Korea's industrial giants may have been willing to outsource the production of nasty chemicals to someone else; existential threats to many-billions/year businesses seems likely to encourage them to start making them at home. In both cases whatever short term gains the threats may yield; longer term it's only going to reduce the amount of stuff the threateners sell to their rivals.
  • bloodgain - Friday, August 9, 2019 - link

    The damage has probably already been done, too. All it takes is a little bit of a scare for someone to recognize that there's a readily-available market for these chemicals in South Korea and step in to supply the market -- and likely cheaper than Japan can, since they can be delivered directly through domestic transport. I'm sure if someone with the requisite skills showed up, the big tech manufacturers would probably get them started with inter-business loans or direct investments.
  • ph00ny - Friday, August 9, 2019 - link

    Based on what i've read, damage is done for sure. White list removal has triggered nationwide movement to boycott and quite a few reps from Japanese companies operating in Korea have confirmed huge decline in sales. Also these major korean companies impacted by this have been pledged support ffrom the korean government (not sure to what extent)
  • eastcoast_pete - Friday, August 9, 2019 - link

    One such consequence is that Samsung and other SK companies are already looking to buy or build manufacturing sites for hydrofluoric acid and other key basic chemicals in the US and other countries. I agree that Japan scored a big self-goal here: the reliability of Japan Inc. as supplier of essential components and materiels is now in question, and Samsung, LG and Hynix will make sure to find alternate sources to avoid being at the mercy of whatever the Japanese government thinks of next.
  • ksec - Friday, August 9, 2019 - link

    Thx Anton Shilov, I know not every one is interested these sort of topic, but it is great you cover the technical backend and more importantly the business side of technology. People often ignore the business side of things, when in reality it is the business side that dictate how technology will be used and sold.
  • ZolaIII - Friday, August 9, 2019 - link

    After 6% decline in a industrial production its a no wonder they decided to open.

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