The Chemicals Between Us

Japanese export curbs have exposed a vulnerability in South Korea’s development strategy

Think of them as weapons of mass disruption. Three ingredients crucial to the global supply chain for smartphones and semiconductors are caught up in a diplomatic wrangle between Japan and South Korea whose origins date to long before either country had transformed itself into a consumer-electronics powerhouse.

In July authorities in Tokyo began requiring Japanese businesses to apply for licenses to export fluorinated polyimide, hydrogen fluoride, and photoresist—a liquid used by semiconductor makers to imprint silicon wafers—to South Korean customers, a process that can take 90 days or more. The three chemicals are essential inputs in the manufacture of memory chips as well as TVs and other types of displays, which are pillars of South Korea’s $1.6 trillion export-driven economy. They are utilized in the production of Apple iPhones, Dell laptops, and a broad range of Samsung devices.

In the weeks that followed, Japan also removed South Korea from a so-called white list that accorded it preferential treatment on exports of materials deemed sensitive because they have military as well as civilian uses. These maneuvers are part of a global trend in which trade and investment rules are being weaponized in disputes between economic or geopolitical rivals—the most obvious example being the U.S.-China confrontation. “Once countries go down the road of using trade policy as a way to increase their geo political influence, it sets a precedent that could be quite harmful to trust in the supply chain,” says Shaun Roache, chief Asia-Pacific economist at S&P Global Ratings.