Japan-South Korea ‘trade war’: has Tokyo shot itself in foot?

Japan is to restrict exports to South Korea of three key materials used in smartphone displays and chips as bilateral ties take turn for the worse

But move could hurt Japanese companies in the long term as Korean firms are forced to rethink their supply chains

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Samsung’s Galaxy Fold. The company could be hit hard by Japan’s new restrictions on exports to South Korea. Photo: Bloomberg

Park Chan-kyong,Julian Ryall,ReutersandAssociated Press

Published: 7:37pm, 2 Jul 2019Updated: 12:48pm, 3 Jul 2019

Japan’s move to tighten controls on exports of hi-tech materials to South Korea has caught Seoul off guard and vulnerable, but it may backfire on Tokyo and send shock waves through the global IT industry, according to analysts.

While South Korean tech giants, such as Samsung Electronics, SK Hynix and LG Display, are likely to be hit hardest by the move in the short term, analysts say Japan may suffer in the long term as such companies will be forced to rethink their reliance on Japanese parts.

On Monday, Tokyo announced it would tighten restrictions on exports to South Korea of three materials used in smartphone displays and chips, a move that is likely to create major headaches for Seoul’s tech firms.

The move came as relations between the two neighbours hit a new low in their row over Japan’s use of forced labour during World War II. Tokyo has been angered by a South Korean court decision last year that ordered Japanese firms to compensate the victims of forced labour, as it believes the matter was settled by a 1965 treaty that normalised ties with the South.

Japan’s Chief Cabinet Secretary Yoshihide Suga said restricting imports had become necessary on “national security” grounds after South Korea failed to find a “satisfactory solution” to the wartime labour issue before the Group of 20 summit on Saturday. He denied the move was “retaliation” against South Korea, saying that it was because the “mutual trust” that underpinned the exports system had been eroded.

From Thursday, Japanese manufacturers will need to file individual applications for South Korea-bound exports of fluorinated polyimide, hydrogen fluoride and resists, which are used in the manufacturing process of chips and displays for smartphones and televisions.

Japan-South Korea ‘trade war’: has Tokyo shot itself in foot?

Japan is to restrict exports to South Korea of three key materials used in smartphone displays and chips as bilateral ties take turn for the worse But move could hurt Japanese companies in the long term as Korean firms are forced to rethink their supply chains

Japan is to restrict exports to South Korea of three key materials used in smartphone displays and chips as bilateral ties take turn for the worse

But move could hurt Japanese companies in the long term as Korean firms are forced to rethink their supply chains