Korea significantly reduces dependence on Japan

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Korea significantly reduces dependence on Japan

President Moon Jae-in, center, watches a demonstration on etching semiconductors using hydrogen fluoride at an MEMC plant in Cheonan, South Chungcheong, in November 2019. [YONHAP]

President Moon Jae-in, center, watches a demonstration on etching semiconductors using hydrogen fluoride at an MEMC plant in Cheonan, South Chungcheong, in November 2019. [YONHAP]

Korea’s dependence on key materials, parts and equipment from Japan has declined significantly in the last two years, especially when it comes to materials essential to the manufacturing of semiconductors and display panels.  
 
The Ministry of Trade, Industry and Energy on Thursday announced Korea’s dependence on Japan for key materials, parts and equipment in the first five months of the year was 15.9 percent, a drop from the 16.8 percent in the same period in 2019.
  
That’s a 0.9 percentage points difference.  
 
Korea’s dependence on China for these key imports dropped from 29.8 percent to 26.7 percent during the same period.  
 
Dependence on the U.S. rose from 12.2 percent to 12.3 percent.  
 
In terms of the most important 100 materials, parts and equipment, dependence on Japan has declined from 31.4 percent to 24.9 percent, a 6.5 percentage point drop.  
 
The ministry said dependence is falling at a faster rate in recent years.  
 
Import dependence in terms of hydrogen fluoride, photoresists and fluorinated polyimides, the top three on the list, has fallen most dramatically.
 
Imports of hydrogen fluoride, which is a key material in manufacturing high-quality semiconductors, from Japan declined 83.6 percent in the first five months of this year to $460 million won, from $2.8 billion in the first five months of 2019.
 
According to the government, imports of hydrogen fluoride were reduced as production by Korea’s own Soulbrain has doubled.  
 
While the government has not yet released specific details on EUV photoresists, another key material for the manufacturing of semiconductors, dependence on Japan in this category fell below 50 percent, with replacements from Belgium expanding 12 fold over the past two years.  
 
Korea no longer buys fluorinated polyimides from Japan.  
 
The two countries have been in a trade war since Japan implemented trade restrictions on the three components and materials essential in the making of semiconductors and display panels, which are leading Korean export items, in July 2019.  
 
While the Japanese government cited national security in its policy change, the move followed a Korean court decision to hold Japanese companies accountable for forced labor during the occupation period.
 
The Moon Jae-in government in response announced measures that focus on increase production of materials, parts and equipment as well as diversifying supply networks.  
 
The plan also included investing roughly 3 trillion won ($2.6 billion) between 2019 and 2021 on research in the relevant technologies.
 
The government cited the achievement as a result of cooperation between the government, companies and materials, parts and equipment suppliers.
 
Large companies opening production lines to suppliers to test new technology contributed to developing Korea’s replacements.  
 
The government said R&D projects jointly conducted by companies and suppliers generated 330.6 billion won in revenue since 2019, resulted in 445.1 billion won in investment, created 3,291 jobs and resulted in the registering of 1,280 patents.  
 
The ministry said this year it will create a 600-billion-won fund that will support materials, parts and equipment suppliers that are in financial straits.  
 
“In the last two years, we were able to lead in the global value chain through our experience of overcoming the crisis,” said Moon Sung-wook, Minister of Trade, Industry and Energy. “We will continue our efforts so we could leap forward as a global leader in the high-tech industry.” 
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