Japan and South Korea, two of the United States nearest allies in Asia, are locked in a trade conflict that threatens both crown jewel Samsung Electronics and the global phone supply chain.
On July 1, citing national security concerns, Japan positioned restrictions on exports to South Korea of three chemical materials crucial for the manufacture of semiconductors and screens utilized in smartphones and televisions. That poses an enormous headache for firms like Samsung, SK Hynix, and LG Show, which rely heavily on Japan, the essential source for the chemicals globally. Tokyo’s official statement stated that some South Korean corporations weren’t properly managing the chemicals, while a Japanese report mentioned some supplies might have ended up with North Korea. Seoul conflicts that and says it has enforced trade restrictions on sensitive materials and on North Korea.
The dispute may escalate next week when Japan is due to make an announcement on whether it’s removing South Korea from a listing of the nation’s preferred trading partners, which might require Japanese firms to acquire additional export verifications on hundreds of products before selling them to Korean corporations. The US has mentioned it has no plans to mediate between its two allies, essential to its aims of balancing China and addressing the threat from North Korea, and known as for them to “sit down and discuss.” However, bilateral talks have failed to yield progress, and yesterday (July 16) Seoul rejected Tokyo’s proposal of third-party arbitration.