Following Japan's removal of Korea from the trade white list on August 2, South Korea will also remove Japan from the trade white list on August 12. Trade disputes between Japan and South Korea around high-end materials continue to ferment, at the expense of each other & ldquo; Rakh & rdquo;. In this dispute, South Korea exposed the shortcomings of industry, Japan had to change the flow of trade, both sides had a difficult time. To some extent, developments have also affected the international market trend of semiconductor and smart display materials in Asia and even in a wider range.
Trade disputes between Japan and South Korea are intensifying. In the process of development, Korea has exposed the problems of insufficient high-end material technology and weak impact resistance of pillar industries. In order to solve this problem, the Korean government is preparing to provide special funds and organize research institutions and enterprises to tackle key problems with a view to product substitution. Multinational enterprises are eager to try, hoping to expand their influence in the Korean market. However, as a key downstream, the Korean semiconductor industry is not active enough and is still unwilling to terminate its cooperation with Japanese chemical enterprises.
Setting goals for industrial self-improvement
As a manufacturing power, the Korean economy is heavily dependent on Japan. At present, the Korean economy has six pillar industries, namely semiconductor, automobile, steel, construction, shipbuilding and petroleum chemistry. According to a report released in July by the Korea Institute of Economic Research (KDI), most of Korea's heavy industries lag behind Japan, and the six pillar industries need to import large quantities of high-end raw materials from Japan.
According to statistics, in 2018, Korea imported 4227 products from Japan, with a trade deficit of $24 billion. Among them, there are 253 products that depend on more than 50% of Japanese imports. Imports of these products amounted to 15.85 billion US dollars. More than 90% of Japanese imports depend on 48 products, with total imports amounting to $2.78 billion. In July, among the three key chemicals that Japan restricted exports to Korea, fluorinated polyimide, photoresist and high purity hydrogen fluoride were 93.7%, 91.9% and 43.9% respectively. South Korea's economy depends on Japan. In addition to the international economic division of labor, the backwardness of key technologies is also an important reason. Therefore, in response to Japan's high-end material restrictions, the Korean government immediately launched self-rescue activities in key technical areas.
On August 5, three days after the Japanese government removed South Korea from the White List, the Korean government announced that it planned to invest 7.8 trillion won ($6.42 billion) over the next seven years to develop materials and equip related facilities to reduce dependence on Japanese imports. It is reported that South Korea plans to improve the self-sufficiency of 100 categories of products, with the goal of establishing a stable supply system within five years. For 20 categories of products, such as high purity hydrogen fluoride, photoresist and fluorinated polyimide, the government requires that the above objectives be achieved within one year.
The South Korean government said in its statement that the plan aims to overcome the weaknesses of the materials, parts and equipment sector in South Korea. At the same time, South Korea also proposed support measures to provide more than 2.5 trillion won ($2.075 billion) of financing support for overseas mergers and acquisitions of Korean enterprises. However, the Korean government did not publish a specific list of 100 categories of products, but the industry speculated that the products were concentrated in six areas: semiconductors, display screens, automobiles, motors and electronics, machinery and metals, and basic chemistry.
Domestic and foreign enterprises are eager to try
Many Korean enterprises began to look for non-Japanese high-end materials supply, which also provides opportunities for domestic and foreign chemical enterprises.
Korean Matsumoto intends to enter the semiconductor and display materials related chemicals business. Sources said that Matsuhara will actively enter the electronic chemicals business on the basis of tamping resin additives and flame retardants. The company is promoting research and development of coating additives. Its factories in South Korea, Shuiyuan and India will produce new products according to customers'needs.
BASF is currently producing electronic ammonia water in Korea, and has built new production equipment for semiconductor cleaners at Lishui plant. It is expected to start construction between the end of this year and the beginning of next year. It is reported that the company is ready to export high-purity hydrogen fluoride from Taiwan to Korea to meet the demand of Korean semiconductor industry.
China's leading fluorine chemical enterprises, Dofdo, are also coping with this change and seizing opportunities. The market leader of the multi-fluorine multi-market introduced that the market demand for electronic-grade hydrofluoric acid in Korea was relatively large, and the company had its layout earlier. From the company's recent contacts with several Korean enterprises, each enterprise's monthly demand for electronic-grade hydrofluoric acid reaches 1000-2000 tons. If the docking cooperation between the two sides succeeds, there will be a lot of room for the subsequent growth of multi-fluorine and multi-electronic chemical products in Korea.
There are still doubts in the semiconductor industry
However, the Korean semiconductor industry has some concerns about whether to replace Japanese raw materials. On the one hand, Korean semiconductor industry has long cooperated with Japanese chemical enterprises. Both sides trust each other, and the downstream demand requires the semiconductor industry to ensure stable production. On the other hand, potential trade risks require the semiconductor industry to find more stable suppliers.
In the semiconductor industry, downstream design companies will impose strict restrictions on the technical requirements of semiconductor products. To meet the downstream demand, the semiconductor industry must have high requirements for the quality of upstream raw materials. Therefore, replacing high-quality products already in use is quite painful for the semiconductor industry. It takes months or even years of experimentation to complete the replacement.
Since July, leading Korean semiconductor companies such as Samsung and SK Hynix have sent their executives to Japan for negotiations to ensure short-term supply. On the other hand, they have searched for new suppliers around the world and carried out alternative experiments. On August 12, Samsung signed a supply contract with JSR and IMEC, a joint venture of Belgian research institute, in Belgium to obtain new supplies outside Japan for the first time, but still uses Japanese technology.
The Korean government also has doubts about the policy of localization of high-end materials. In areas where the market share of Japanese enterprises is less than 50%, it is possible to achieve market substitution within one year, but in areas where the market share of Japanese enterprises is more than 90%, it is almost impossible to achieve market substitution quickly in terms of technology and market competition.