Last week, Japan said it would stop the preferential treatment of exporting three kinds of materials to South Korea, requiring exporters to obtain approval for each export, with a approval cycle of about 90 days.
The restriction order applies to three Japanese-dominated raw materials: lithographic materials (thin films used to transfer circuit diagrams to semiconductor substrates), high-purity hydrogen fluoride (used as etching gases in chip manufacturing) and fluorinated polyimides (used to make smartphone displays).
Park Jea-gun, chairman of Korea Society of Semiconductor & Display Technology, said Samsung Electronics (005930.KS) and SK Hailishi (000660.KS) were trying to increase their purchases from suppliers in mainland China or Taiwan.
He added that this included exploring the intentions of companies outside Japan that might have sufficient inventory.
Kim Young-woo, an analyst at SK Securities, said the chipmakers had sent sales teams to joint ventures run by factories and suppliers outside Japan to ensure inventory.
Samsung Electronics said it was already evaluating a number of initiatives to minimize the impact of Japan's export controls. According to a person from Samsung Electronics, Li, vice president of Samsung Electronics, arrived in Tokyo on Sunday. The company official did not disclose more details about what Samsung would do.
SK Hailishi did not comment.
Although it is unclear to what extent Japan will slow down its export approval process or turn to a ban, South Korean chipmakers are concerned that the situation may turn into a full-blown crisis.
"These materials are not things we can quickly find and buy elsewhere," said a source from a Korean chip manufacturer. The source refused to sign because of the sensitivity of the matter.
"Even if we find alternatives outside Japan, we have to test to ensure that the quality is good enough to produce high-yield chips."
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