The Japanese government imposed export restrictions on semiconductors and display products on July 4 as a retaliatory measure against the Korean Supreme Court's ruling on Japan's forced labor.
According to the industry, it is likely that Samsung Electronics, SK Hynix, Samsung Display and LG Display will be affected most by this regulation.
Materials regulated by the Japanese government are photoresist and etching gas that are used in manufacturing semiconductors, flexible organic light-emitting diode (OLED) used in latest smartphones, and fluorine polyimide used in manufacturing display panels.
An expert in the semiconductor industry commented, "It is inevitable for Korean companies to suffer damage due to Japan's regulations on exports of semiconductor materials. However, the damage is not expected to be substantial."
"Rather, since late last year, supplies of inventories have increased continuously due to oversupply of memory chips in the semiconductor market. Losses of Samsung Electronics and SK hynix also widened in the first quarter as prices of memory chips continued to fall," he added. "The loss was expected to be recoverable only in the fourth quarter, but the Japanese government's regulations may give both companies a chance to look back on their long-term production plans by handling existing inventories."
The same applies to display industries. Fluorine polyimide is a raw material for the Colorless PI (CPI) film and is recently being used for Cover Window in a foldable display. In case of fluorine polyimide, it is manufactured by Dupont in addition to Japanese companies. Also in Korea, Kolon Industries, SK Innovation and SKC also produce CPI films.
LG Display, which supplies panels to LG Electronics, is reportedly replacing Japanese products with those of Kolon Industries.
For cover window of foldable display, the use of "CPI" instead of glass materials is due to folding characteristics. However, CPI can be used as an alternative to Ultra Thin Glass (UTG).
Recently, Schott of Germany introduced 70um-thick UTG at SID 2019. Industry sources have mentioned that Samsung Display is considering applying UTG instead of CPI products to foldable displays in the future.
As LG Display has yet to produce foldable displays, it is believed that this restriction will have no effect at all.
Regarding the restriction as an opportunity to boost the local materials industry, the government has decided to spend 1 trillion won every year, and, as a result, R&D investment is likely to expand.
On July 3, Trade, Industry and Energy Minister Sung Yun-mo said, "We will invest 1 trillion won each year on the material being regulated. In particular, we will support the government to diversify imports of materials and components and enhance competitiveness in domestic production."