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Japan's restrictions on exports of three chip-making materials to South Korea last month could undermine the global technology supply chain, as 70% or more of these restricted products are supplied by Japan. Memory chip giants Samsung Electronics (005930.KS) and SK Hynix (000660.KS) are both in Korea.
Although the move highlights the firm low position of Japanese companies in the industry, it also raises concerns about the loosening of their control over niche markets such as fluorinated polyimides, photoresist and hydrogen fluoride.
"Korean companies choose Japanese materials on the basis of stable quality and supply. But now they are aware of the need to change and are already taking action, "said a source from a Japanese material supplier.
"It's a heavy blow to us."
For example, several sources familiar with the chip supply chain said that Samsung had strengthened testing of non-Japanese photoresist and hydrogen fluoride.
Soulbrain (036830.KQ) is the world's largest and third largest supplier of hydrogen fluoride to Samsung and Hynix. The company has a factory under construction. The company's goal is to make the hydrogen fluoride produced by the factory pure in Japan.
But industry experts point out that because these three high-tech materials are not easy to replicate, it will take time for Korean enterprises to transfer to the upstream of the value chain.

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