Japan allows further exports of high-tech material to South Korea: Sources

The high-tech material cleared for Japan's exports to South Korea is photoresists, which are crucial for Samsung Electronics' advanced contract chipmaking production.
The high-tech material cleared for Japan's exports to South Korea is photoresists, which are crucial for Samsung Electronics' advanced contract chipmaking production.PHOTO: REUTERS

SEOUL (REUTERS) - Japan has approved shipments of a high-tech material to South Korea for the second time since imposing export curbs last month, two sources said, ahead of talks by government officials this week to resolve a dispute stemming from their wartime past.  

Relations between the two US allies worsened late last year as part of a decades-old row over compensation for forced labourers during Japan’s wartime occupation of South Korea.  

In early July, Japan tightened controls on shipments to South Korea of three materials used in chips and displays, threatening to disrupt the global tech supply chain. Japan also announced a plan to remove South Korea’s fast-track export status from later this month.

The high-tech material cleared for Japan’s exports to Samsung Electronics Co Ltd in South Korea is photoresists, which are crucial for the tech giant’s advanced contract chipmaking production, the people who were familiar with the matter said on Tuesday.  

A Samsung Electronics spokeswoman and a South Korean trade ministry spokeswoman declined to comment. A Japanese official in charge of the issue was not available for comment.

An official at South Korea’s presidential office confirmed the exports at a briefing, but said that “uncertainties” will remain until Japan completely removes the tighter export controls it has instituted.  

“Tokyo’s latest export approval is positive for the local industry, but I don’t see Japan’s move as a conciliatory message to South Korea,” another South Korean government official told Reuters, requesting anonymity because of the sensitivity of the matter.

Earlier this month, Japan gave the green light to the export of photoresists to Samsung Electronics for the first time since it imposed the restrictions.  

Samsung Electronics shares ended up 1.95 per cent on Tuesday, leading the wider market’s gain of 1.05 per cent.

Japan’s latest move comes ahead a meeting between Japanese Foreign Minister Taro Kono and his South Korean counterpart, Kang Kyung-wha, in Beijing on Wednesday.

“This is a signal that Japan would not further escalate tensions. This is positive in that it creates an atmosphere for talks,” said Ahn Duk-geun, a international studies professor at Seoul National University.

But he said he does not expect a breakthrough in the stalemate, citing wide differences over how to resolve forced labour issue between the two neighbouring countries. “I hope there will at least be a handshake,” Ahn said.

The two ministers will also this week meet their Chinese counterpart, Wang Yi, in the first such trilateral gathering in three years, government officials said.  

“We will have to actively express our position, but it is a very difficult (situation),” Kang said at an airport in Seoul on Tuesday before leaving for Beijing.

Separately, South Korean President Moon Jae-in pledged to nurture the local carbon fiber industry, as part of efforts to reduce dependence on Japan imports for high-tech materials.

Moon attended an event by South Korean firm Hyosung Advanced Materials to announce a total of 1 trillion won (S$1.15 billion) investment by 2028 in expanding production of carbon fiber, one of the items potentially subject to tighter export controls and used to make parts of hydrogen cars and aircrafts.

Currently, South Korean firms rely on Japan’s Toray Industries and others for carbon fiber supplies, industry officials say.