Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Economy & Forex

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

South Korea government, Samsung team up for self-sufficiency after Japan export curbs on chip material

share with twitter share with LinkedIn share with facebook
09/14/2020 | 06:54am EDT
An employee works beside the Atom Probe Tomography at National Nanofab Center in Daejeon

DAEJEON, South Korea (Reuters) - When the South Korea government unveiled an expanded semiconductor material testing facility last month, the centrepiece was a towering white machine given by Samsung Electronics at a fraction of its market price.

The facility, aimed at motivating local suppliers to make and test sophisticated chipmaking materials like photoresist, comes as South Korea pushes for self-sufficiency after Japan last year imposed export curbs https://www.reuters.com/article/us-southkorea-japan-laborers-chip-analys/south-korean-chip-giants-face-strangling-from-japanese-export-curbs-idUSKCN1UR3LZ on high-tech chip materials.

While industry sources warn Korea has a long way to go to achieve this, the need for self-reliance in chip technology has become more critical with the outbreak of the coronavirus pandemic and U.S.-China tensions threatening to accelerate supply chain shifts.

Large chip-making companies like Samsung would previously source the best components at the cheapest price "no matter where the material was from", said Lee Jo-won, president of the National Nanofab Center, home to the testing facility.

"But due to Japan's export curbs and COVID-19, they have begun to ... foster local suppliers and to create a system where they can be supplied without disruptions," Lee told Reuters at the centre in Daejeon city, 150 km (93.21 miles) south of Seoul.

The equipment that Samsung sold to the lab, the ArF immersion lithography machine made by ASML, will help local suppliers test chip material.

The machine, which the world's top memory-chip maker had been using in its production line, costs up to 100 billion won ($84 million) when new, experts said.

A National Nanofab Center official said about 20 billion won had been budgeted to buy and refurbish the machine, without giving details on the final price.

"This would never have been imaginable in the past, to provide such an expensive device to a public lab," said Lee Jong-ho, a professor at Seoul National University.

"It took a decision from pretty high up."

SHORING UP BUSINESSES

Samsung has decided to invest in firms that need cooperation to develop next-generation chip technologies, a company spokesman told Reuters in an email.

It recently invested a total of about $113 billion won in two local makers of chip components and testing equipment, S&S Tech Corp and YIK Corp, its first such investments in three years.

S&S makes mask blanks, a chipmaking component that is currently more than 90% sourced from Japanese firms like Hoya but not included in export curbs.

"Samsung seems to be securing various options so they're not too dependent on any one source", said an official at a Samsung-backed chip material supplier.

With no sign of a thaw in South Korea-Japan tensions, rooted in wartime history https://www.reuters.com/article/us-southkorea-japan-history-explainer/explainer-history-islets-and-rulings-behind-tension-between-s-korea-and-japan-idUSKBN1XW19K, Seoul is pushing to diversify supply sources of 100 items it still mainly gets from Japan and has pledged to invest 5 trillion won by 2022 to that end.

South Korea has already diversified sourcing for the three materials targeted by Japan in the curbs last year https://www.reuters.com/article/us-southkorea-japan-laborers-factbox/factbox-the-high-tech-materials-at-the-heart-of-a-japan-south-korea-row-idUSKCN1TX12I and now gets supplies locally and from Belgium, Taiwan and China.

SCEPTICISM

But there is scepticism about whether it makes economic sense for Korea's small domestic chip material market to pour money into developing sophisticated technology in which Japan has a competitive edge, industry experts said.

Also, Seoul wants big corporations to use local suppliers, "but this is not an easy option unless quality is guaranteed", said Kwon Hyeok-min, leader of an industrial policy team at Korean business lobby group, Federation of Korean Industries.

Samsung, SK Hynix and LG Display supply chips and displays to tech giants like Apple, Qualcomm and Huawei [HWT.UL].

The chip sector accounts for 20% of exports for South Korea, Asia's fourth-largest economy.

It will take time to localise high-tech materials like EUV photoresist, former Hynix engineer Kim Sang-yong said. Japan accounts for 90% of the global photoresist production.

Photoresists, which Japan targeted in its curbs that it later partially reversed https://www.reuters.com/article/uk-southkorea-japan/japan-reversed-export-curbs-for-chip-material-to-south-korea-trade-ministry-official-idUSKBN1YO11L, are thin layers of material used to transfer circuit patterns onto semiconductor wafers.

Kim, now a professor at Korea Polytechnics University, also cautioned South Korea could be hit hard should Japan expand curbs to chipmaking equipment.

Out of South Korea's 100 import items heavily dependent on Japan, 14 are semiconductor-making equipment that are not subject to any restrictions, according to the Seoul-based Institute for International Trade.

If Japan extends curbs to these 14, South Korea's "chip production will stop", Kim said.

"What is more vulnerable than materials are the equipment and parts that manufacture semiconductors."

By Joyce Lee and Hyunjoo Jin


Stocks mentioned in the article
ChangeLast1st jan.
APPLE INC. 3.71% 115.32 Delayed Quote.57.09%
ASML HOLDING N.V. -0.92% 311.65 Delayed Quote.19.45%
DONGJIN SEMICHEM CO LTD End-of-day quote.
HOYA CORPORATION -1.29% 12630 End-of-day quote.20.86%
JSR CORPORATION -0.49% 2414 End-of-day quote.19.98%
LG DISPLAY CO., LTD. -2.36% 14450 End-of-day quote.-11.08%
QUALCOMM INCORPORATED 4.00% 126.44 Delayed Quote.43.31%
S&S TECH CORP End-of-day quote.
SAMSUNG ELECTRONICS CO., LTD. -1.53% 58100 End-of-day quote.4.12%
SK HYNIX, INC. -1.45% 81700 End-of-day quote.-13.18%
TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED -1.58% 437 End-of-day quote.32.02%
TOKYO OHKA KOGYO CO., LTD. -1.88% 6260 End-of-day quote.46.26%
YIK CORP End-of-day quote.
share with twitter share with LinkedIn share with facebook
Latest news "Economy & Forex"
04:16aCHINA CENTRAL BANK : Overseas entities had 983.1 bln yuan of outstanding domestic loans as of end-sept
RE
04:16aCHINA CENTRAL BANK : Overseas entities had 2.75 trln yuan of domestic equities as of end-sept
RE
04:16aCHINA CENTRAL BANK : Overseas entities held 1.193 trln yuan of domestic deposits as of end-sept
RE
04:16aCHINA CENTRAL BANK : Overseas entities held 2.979 trln yuan of domestic bonds as of end-sept
RE
04:16aIn Japan's Nagasaki, some glimmers of economic revival
RE
04:13aAna to cut executives pay by half - kyodo
RE
04:10aChina shares end lower; consumer, banks help markets post monthly gains
RE
04:10aVivo Energy resumes dividend pay on improved trading
RE
04:08aGlencore beats production estimates but trims coal guidance
RE
04:05aFrench Economy Registers Record Rebound in 3Q -- Update
DJ
Latest news "Economy & Forex"