By Bilal Hafeez 25-07-2019
In: post, China & Hong Kong

China Caught in Crossfire of Tokyo-Seoul Chipmaking Feud (Asian Review, 3 min read)


(You can read the article by clicking here)

South Korea is on Japan’s white list of trading partners. But not for long. It plans to impose export restrictions as soon as August, which would have major cross-country impact on semi-conductor trade in East Asia. The two major chipmakers, Samsung and SK Hynix, are based in South Korea and are responsible for up to 70% of worldwide production. And they predominantly manufacture in China, using materials imported from Japan. Tougher restrictions on the supplying of raw material to continue this production would not only make China an unattractive host, it would hurt South Korea’s GDP. To counteract, President Xi Jinping is aiming to make 40% of the chips needed at home by 2025.

Why does this matter? With US tech restrictions on China and now a spat between Korea and Japan, the chip sector is up in the air. However, keep an eye on the discussion at the World Trade Organisation next month – Japan is aware that export controls look bad and might defuse the threat. This doesn’t appear to be fully priced by the tech hardware sector.

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