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Japan to effectively ban exports of semiconductor materials to South Korea

The Yomiuri ShimbunThe Economy, Trade and Industry Ministry announced Monday that the government will more tightly control exports to South Korea of chemicals used in producing semiconductors and other devices.

The measure will be a de facto embargo that will likely deal a strong blow to the South Korean economy, in which semiconductors are a major industry. This is effectively a countermeasure against the South Korean government, which has not taken any steps to resolve the issue of a court decision involving a Japanese firm and South Koreans who were requisitioned workers during World War II.

Three chemicals will be subject to the move: fluorinated polyimide, which is used in smartphone displays and other components; photoresist, a light-sensitive material used in semiconductor substrate; and hydrogen fluoride, which is used to wash semiconductors.

So far, Japan has applied simplified procedures for exporting these chemicals to South Korea, but starting Thursday, they will no longer be eligible for this preferential treatment. Japan holds a large share of the global market in these chemicals, and as they can be used in military items, the Japanese government controls their export amounts and other matters.

Once the chemicals are no longer eligible for preferential treatment, exporters must obtain permission for every shipment, and screening will take about 90 days. The government plans not to grant export permission in principle, which means the measure will be a de facto embargo.

Japan accounts for nearly 100 percent of global production of fluorinated polyimide and photoresist, and produces about 70 percent of the world’s hydrogen fluoride. South Korean semiconductor giants such as Samsung Electronics and SK Hynix Inc. are believed to import almost all their supply of the three chemicals from Japan.

In addition to these three products, Japan will tighten regulations on exports of communications devices and other products. Japan has granted preferential treatment to the United States and 26 other countries under the export control system for security reasons, but the government will begin procedures to revise the relevant ordinance to exclude South Korea.

If excluded, an application will be required for every export of products that could have national security implications, such as integrated circuits. The government will revise the ordinance by the end of August after seeking public comment.

Regarding the South Korean court decision, Tokyo has urged Seoul to deal with the issue, saying the ruling runs counter to the 1965 Japan-South Korea agreement on the settlement of matters concerning property and claims, and on economic cooperation. However, Seoul has not responded to Tokyo’s request.

There has also been a series of incidents that have harmed the bilateral relationship, including the South Korean Navy’s radar lock-on to Self-Defense Force aircraft. Based on these developments, Tokyo has concluded that it would be difficult to maintain the export control system for South Korea based on a relationship of trust, according to officials.

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