Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  TAIWAN STOCK EXCHANGE  >  Taiwan Semiconductor Mfg. Co. Ltd.    2330   TW0002330008

TAIWAN SEMICONDUCTOR MFG. CO. LTD.

(2330)
  Report  
SummaryNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsAnalyst Recommendations

South Korean chip giants face 'strangling' from Japanese export curbs

share with twitter share with LinkedIn share with facebook
share via e-mail
0
08/01/2019 | 05:34am EDT
FILE PHOTO: The logo of Samsung Electronics is seen at its office building in Seoul

SEOUL (Reuters) - South Korean chipmakers are hitting a dead end in their quest to find alternatives for key Japanese materials that have been slapped with export restrictions, raising the prospect of major disruption to their operations in the coming months.

Japan is now requiring special approval for sales of three high-tech materials, including two that are critical for chipmaking, to South Korea amid a deepening diplomatic dispute over compensation for forced labour during World War II.

South Korea-bound exports of the materials, including hydrogen fluoride gas and chemicals known as photoresists, now require government approval. No approvals have been granted since the dispute broke in early July, South Korean industry sources said.

"Japan is slowly strangling our neck", one senior official at a major South Korean major chipmaker told Reuters, requesting anonymity due to the sensitivity of the matter.

South Korean chipmakers have been plotting workarounds, such as seeking supplies directly from factories in China or Taiwan owned by their Japanese suppliers, but government officials this week warned them not to go that route.

At a closed-door meeting on Monday, South Korea's chip industry group handed out government guidelines to its members, including Samsung Electronics and SK Hynix.

The guidance seen by Reuters cautioned that Japanese firms can rightly refuse to ship the materials from third countries, and that any efforts to bypass restrictions could subject both chipmakers and suppliers to broader international trade sanctions.

"Simply put, don't sweat over importing Japanese materials," said one official at the Korea Strategic Trade Institute who is not authorised to speak to media.

LIMITED ALTERNATIVES

Efforts to find alternatives to the Japanese suppliers have also struggled to make headway.

Although there have been offers from Russian and Chinese suppliers, chipmakers say that for most purposes they need Japan's high-purity hydrogen fluoride because it helps them get high "yield" rates, which is critical to making chips profitably.

Yield is especially important in manufacturing memory chips, used in everything from smartphones to vehicles and where Samsung and SK Hynix control more than half of the global market.

"Even if we want to use products from other countries to replace Japanese, it will take months to prove them as suitable for our current manufacturing systems and performance," a second official at a South Korean major chipmaker said, who also requested anonymity.

Major South Korean chipmakers are now testing some non-Japanese materials, South Korean deputy trade minister Kim Yong-rae told foreign media on Wednesday.

Samsung said Japanese curbs on the export of chip-making materials were blurring its business outlook as it reported a halving in quarterly profit on Wednesday.

"Even though the recent measures by the Japanese government do not ban export of materials, we are facing difficulties due to the burden of this new export approval process and uncertainties this process will bring, so the visibility is low," Robert Yi, Samsung's head of investor relations, said on an earnings call.

The company was reviewing various measures to minimise impact, he said, without providing further details.

The curbs on photoresists only apply to those used in producing chips based on an advanced technique known as extreme ultraviolet or EUV lithography.

But that could hobble Samsung's efforts to use the technology to catch up with rival Taiwan Semiconductor Manufacturing Co Ltd in the booming business of building advanced chips for other companies.

"If Japan's exports controls continue further, Samsung will inevitably face long-term consequences operating its EUV machines and a hard time meeting their production agenda," said Park Sung-soon, an analyst at Cape Investment & Securities.

South Korean chipmakers and their local suppliers are bracing for further moves by Tokyo to drop South Korea as a preferred trading partner, which would mean tighter regulations for a broader range of chip products bound for South Korea.

South Korea's top imports from Japan by value last year were semiconductor components and equipment ranging from silicon wafers to chip etching machines, according to data provided by Korea International Trade Association.

In 2018, South Korea bought a total $11 billion worth of semiconductor parts and equipment from Japan, accounting for nearly 20% of Japanese imports, the data shows.

The South Korean government has launched a campaign to nurture local suppliers to counter Japan's restrictions, but analysts and officials at suppliers say the goals are unrealistic.

"On top of local suppliers' efforts, current nationwide efforts to localise high-tech materials will continue, but we cannot replace all materials by ourselves," said an executive at a South Korean supplier for Samsung and SK Hynix.

"It will take a long time to get there and we need to cooperate with Japan."

(For a
graphic on 'South Korea's imports of Japanese chipmaking products', click

(Reporting by Ju-min Park and Heekyong Yang in Seoul. Additional reporting by Makiko Yamazaki in Tokyo and Hyunjoo Jin in Seoul. Editing by Jonathan Weber and Lincoln Feast.)

By Heekyong Yang and Ju-min Park

Stocks mentioned in the article
ChangeLast1st jan.
SAMSUNG ELECTRONICS CO LTD End-of-day quote.
SK HYNIX INC End-of-day quote.
STELLA CHEMIFA CORPORATION 0.53% 2674 End-of-day quote.8.74%
TAIWAN SEMICONDUCTOR MFG. CO. LTD. End-of-day quote.
TOKYO ELECTRON LIMITED 0.61% 21505 End-of-day quote.78.91%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on TAIWAN SEMICONDUCTOR MFG.
10/10TAIWAN SEMICONDUCTOR MFG : TSMC September 2019 Revenue Report
AQ
10/01TSMC counter-sues U.S. chip rival GlobalFoundries for patent infringement
RE
09/30ASIA MARKETS: Asian Markets Rise Ahead Of Australia Interest-rate Announcemen..
DJ
09/30TSMC counter-sues U.S. chip rival GlobalFoundries for patent infringement
RE
09/24Chip Stocks Are Back on the Menu
DJ
09/21TAIWAN SEMICONDUCTOR MFG : President Tsai reaffirms commitment to Taiwan's semic..
AQ
09/20TAIWAN SEMICONDUCTOR MFG : president vows to work with industry leaders to promo..
AQ
09/19TAIWAN SEMICONDUCTOR MFG. CO. LTD. : Ex-dividend day for interim dividend
FA
09/11TAIWAN SEMICONDUCTOR MFG : TSMC breaks monthly revenue record
AQ
09/09ASIA MARKETS: Asian Markets Mixed As Investors Digest Economic Data Ahead Of ..
DJ
More news
Financials (TWD)
Sales 2019 1 049 B
EBIT 2019 362 B
Net income 2019 330 B
Finance 2019 564 B
Yield 2019 3,52%
P/E ratio 2019 22,1x
P/E ratio 2020 18,5x
EV / Sales2019 6,43x
EV / Sales2020 5,63x
Capitalization 7 312 B
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 294,80  TWD
Last Close Price 282,00  TWD
Spread / Highest target 24,1%
Spread / Average Target 4,54%
Spread / Lowest Target -25,2%
EPS Revisions
Managers
NameTitle
Che Chia Wei Vice Chairman & Chief Executive Officer
Te Yin Liu Chairman
J. K. Wang Senior Vice President-Operations
Renzhao Huang Chief Financial Officer
J. K. Lin SVP-Information Technology & Materials Management
Sector and Competitors
1st jan.Capitalization (M$)
TAIWAN SEMICONDUCTOR MFG. CO. LTD.239 037
INTEL CORPORATION11.00%230 759
TEXAS INSTRUMENTS37.66%121 455
NVIDIA CORPORATION39.32%113 268
BROADCOM INC.10.47%111 429
QUALCOMM34.77%93 241