Japan and South Korean trade relations over the past two months have soured as the conflict threatens to disrupt a critical node in the global tech supply chain, potentially benefiting the US Dollar. The origin of the dispute – much like other issues the world is being afflicted by – is political. The underlying source of tensions between the two dates back to Japan’s occupation of Korea during World War II.
Last year, the South Korean Supreme Court ruled that several Japanese companies had to compensate the victims wartime forced labor victims. Tokyo responded that restitution had already been paid through an agreement made in 1965. Amid this dispute, on July 1, Japan restricted the export of hydrogen fluoride gas, fluorinated polyimide and photoresists – all key chemical inputs used to make semiconductors, flat screens and other high-tech products.
Officials in Tokyo cited national security grounds behind their decision to restrict the sale of these key inputs because they can also be used in military hardware. Japan expressed concern that unspecified South Korean companies may have allowed North Korea to access some of these chemicals. Seoul has denied the accusation, though this appears to not have convinced Japan.
Japanese companies will now have to deal with more paperwork and a lengthy permit application process which could cause delays and threaten to disrupt a critical tech supply chain. South Korea is the biggest manufacturer of dynamic random-access memory (DRAM) semiconductors in the world, and home to Samsung and SK Hynix, two key producers of critical inputs used in high-tech hardware. Read More....