Japan cut vital semiconductor input for Korea

Japan threatened to cut exports to Korea of fluorinated polyamide, photoresists and hydrogen fluoride etching gas needed as critical input in Korea’s semiconductor industry. Hanse data shows that while Japan is an important exporter, China’s exports to Korea are significantly greater today than Japan’s. A decline in Korea’s semiconductor exports would be felt most by the U.S.

Japan is an important exporter of fluorinated polyamide, photoresists and hydrogen fluoride etching gas (HS 281111 Hydrogen fluoride (hydrofluoric acid). Korea increased its share in Japan’s exports of hydrogen fluorides from 66.6 percent in 2007 to 89.2 percent (US$32.4 million) in 2016. In 2016, the U.S. is the second largest export destination with 3.6 percent of Japan’s exports in hydrogen fluorides down from 8.6 percent in 2007 followed by China with 3.1 percent down from 14.9 percent. Japan only exported a total of US$46.7 million of hydrogen fluorides in 2016.

China exported US$234.5 million of hydrogen fluorides in 2016. In 2016, its biggest export destination was Japan representing 43.0 percent of China’s exports in hydrogen fluorides (US$100.8 million) followed by Korea with a share of 25.9 percent (US$60.8 million). Korea thus receives from China hydrogen fluoride almost double the amount it receives from Japan. 

The E.U. (15) is also a major exporter of hydrogen fluorides exporting in 2016 US$97.6 million. France is by far the biggest export destination with a share of 47.5 percent in 2016 followed by the Netherlands of 19.1 percent.

The importance of hydrogen fluorides for Korea’s semiconductor industry could imply that any supply disruption that cannot be compensated from other sources could naturally impair Korea’s exports. The U.S. is most dependent on imports in semiconductors (HS 8541 diodes, transistors, similar semiconductor devices) from Korea representing 10.4 percent of total U.S. semiconductor imports in 2016. In 2016, Korea represented 8.7 percent of China’s semiconductor imports, 6.1 percent of Japan’s and only 2.6 percent of the E.U.’s. It serves as affirmation that the complexity of supply chains may imply that export restrictions may have significant indirect negative externalities.

Figure 1. U.S. semiconductor imports
Percent in total U.S. semiconductor imports, HS8541