Dependence on Japan addressed

Dependence on Japan for the supply of three key materials has been lowered significantly, according to the government.

But it added that it will continue with efforts to further reduce the importation of hydrogen fluoride, photoresists and fluorine polyimide from Japan.

Initiatives include frontloading the budget committed to the materials, parts and equipment industry in the first half; increasing cooperation between state-funded research institutions and SMEs in development; and encouraging the acquisition of foreign companies with relevant expertise or capacity.

The Ministry of Trade, Industry and Energy said progress has been made in terms of stabilizing the supply by localizing production and diversifying import sources.

These three key materials are crucial in the manufacturing of semiconductors and displays, important exports for the country.

Production capacity of liquid hydrogen fluoride has more than doubled, while imports from China are already being used in production after undergoing tests.

Locally produced etching gas has been secured with the completion of a new plant and the testing of the output at the end of last year, while U.S. imports are being used in production.

Photoresists imported from Europe are being tested and local supply is being strengthened as DuPont has agreed to build a photoresists production plant in South Chungcheong

A plant that would manufacture fluorine polyimide was completed at the end of last year, and it is currently producing test products.

The ministry said the government is aggressively supporting the development of key materials.

With government department cooperating, the period it takes to approve the chemical materials has been shorted from 75 days to 30 days, while 12 companies were approved to extend working hours and 3.4 trillion won of financial support was provided.

“Since Japan restricted exports in July last year, we were able to achieve meaningful and visible progress on four fronts through swift action through cooperation between the government and private sector,” Finance Minister Hong Nam-ki said. “We were able to secure swift stabilization of the supply of the three materials, increase investment both home and abroad, resolve the difficulties companies faced through cooperation between government departments and establish a strong systematic foundation for the materials, parts and equipment industry.”

The Finance Minister said the goal is not to make the current changes one-offs but to transform it into a long-term endeavor.

“This year, we will complete the stable supply of the three key materials,” Hong said. “And regardless of Japan’s export restriction, we will start working on the steady supply of 100 materials between 2021 and 2025 by employing every means available.”

The ministry said the government plans to frontload 70 percent of the 2.1 trillion won budget, which is double the amount spent in 2019, in the first half of this year.

This year, the government will allocate 150 billion won to establish 15 public institution and nanotechnology centers, where the developed materials, parts and equipment can be tested.

It plans to expand cooperation between companies and academia to develop expertise in the relevant fields, such as Samsung Electronics working with Kyung Hee University, Hyundai Motor working with University of Suwon and Daegu University working with KT.

The government will also create and manage funds supporting materials, parts and equipment companies, with the Ministry of Trade, Industry and Energy providing 100 billion won, the Ministry of SMEs and Startups 100 billion won and the Financial Services Commission 400 billion won.

The government will also support Korean companies seeking the acquisition of and investment in of foreign companies specialized in the much needed materials while increasing incentives for foreign companies investing in Korea.

“The government’s consistent position is for Japan to rollback its unfair export restrictions that have only raised uncertainties in both countries,” said Trade, Industry and Energy Minister Sung Yun-mo.

“We will continue to push for policies that will strengthen the competitiveness and stable supply of materials, parts and equipment,” the minister added.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]