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Trade war. What is it good for? Japan publicly approves shipment of semiconductor chemicals to South Korea

Come on, guys. Do some Seoul searching and break it up

Japan has publicly announced making an export of key chip manufacturing materials to South Korea – presumably meant to ease tensions ahead of strict measures it plans to introduce later this month in an escalating trade war.

Industry minister Hiroshige Seko said today that Japan had granted its approval for the export of a large shipment of material used in three high-tech components for making chips and displays. The restrictions were imposed in July over a row about Japan's wartime conduct and are supposed to come into effect on 28 August.

Essentially, tensions escalated earlier this month after Korea was removed from a special "fast track" white list that oiled exports from Japan to 27 lucky countries. It is the only country ever to have been taken off the list.

Seko told a news conference that Japan made the decision after strict examination, but refrained from commenting on details of the exports, according to a report.

South Korea, crucially, is where two of the world's largest memory suppliers, Samsung and SK Hynix, are headquartered. Invoking the ways it could counterattack, its president, Moon Jae-in, last week said that Seoul would never again be beaten by its neighbour.

Products potentially affected by the controls include fluorinated polyimides, used to make organic light-emitting diode displays; resists used in semiconductor production; and hydrogen fluoride, used as an etching gas in chip making.

Both Korean memory manufacturing giants have cited the conflict as a growing threat to their businesses.

"We cannot rule out production disruption if Japanese export controls drag on," Jin-Seok Cha, head of SK Hynix's finance and procurement, said during a recent earnings call.

The firm also has another issue to contend with at present, and recently said it would cut its DRAM production capacity from Q4 after reporting a second-quarter operating profit decline of 89 per cent year-on-year.

An analysis by TrendForce pointed out that "despite the ripples in the market formed as a result of the Japan-South Korea incident", which caused prices to bounce in the short term, contract prices mainly depend on the basic supply-demand dynamics. "We don't see a significant force keeping prices up. Moreover, contract prices for mobile DRAM and server DRAM, which take up 70 per cent in shipments, remained on a downtrend in 3Q," it said.

As for NAND, the Korean fabber announced its roadmap out to a whopping 800 layers of 3D memory at the Flash Memory Summit yesterday. It said mass production of its 1Tbit 128-layer die would roll out in Q4. ®

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