U.S. technology companies on Tuesday urged governments of South Korea and Japan to patch up differences to prevent unprecedented trade standoff between the two high-tech powerhouses that could unsettle the global value chain.

According to multiple industry sources on Wednesday, six U.S. technology industry groups including Semiconductor Industry Association (SIA) and Semiconductor Equipment and Materials International (SEMI) on Tuesday, local time, sent a letter to Yoo Myung-hee, Korea’s trade minister, and Hiroshige Seko, Japan’s minister of economy, trade and industry. In the joint letter, the business groups expressed concerns about Japan’s recent export curbs on semiconductor-related materials shipped to Korea and urged the two countries to put out efforts for swift resolution to the issue.

The American groups described Japan’s enhanced export restrictions on Korea as “non-transparent and unilateral” and warned changes “in export control policies can cause supply chain disruptions, delays in shipments, and ultimately long-term harm to the companies that operate within and beyond your borders and the workers they employ.”

They also said that world’s information and communications technology industry and manufacturing sector depend on interconnected and complex supply network as well as prompt securing of inventory. The groups noted that Korea and Japan play an important role in such global value chain.

The technology companies urged the two countries to seek swift resolution on the issue so that the global ICT industry and manufacturing sector are able to avoid long-term damage. They called for Korea and Japan to refrain from actions that worsen the situation.

The letter comes after Japan on July 1 announced a decision to tighten export regulations on three materials – polyimide, resist, and etching gas – essential for the production of chips and displays shipped to Korea.

In addition to the enhanced rule that went into effect on July 4, Japan warned that it could remove South Korea from the white-country list, a preferential fast-track status to security allies on Japanese outbound shipments of dual-purpose items and technologies. It receives opinions until Thursday and makes a final decision on whether to strip Korea of the status that could put more than a thousand sensitive chemicals including core parts like silicon wafers and integrated circuits under tight and individual scrutiny and destabilize Korea’s components industry.

Although Tokyo denies any motive beyond security reasons, the move is widely viewed as a retaliatory action for Korean court rulings ordering Japanese companies to remunerate individuals for forced wartime labor, which Japan argues is a done deal through packaged trust fund, aid and loans in 1965 basic treaty for normalizing ties.

The U.S. business groups proposed that all countries trying to change export regulations do so in a multilateral approach so that transparency, objectivity, and predictability are guaranteed.

The letter was signed by SIA, SEMI, as well as Computing Technology Industry Association (CompTIA), Consumer Technology Association (CTA), Information Technology Industry Council (IT), and National Association of Manufacturers (NAM), which include most of U.S. information technology (IT) companies such as Apple Inc. and Google LLC.

The joint letters were issued while U.S. National Security Advisor John Bolton arrived in Seoul after his trip to Tokyo to “continue conversations with critical allies and friends,” according to White House National Security Council spokesman.

Concerns have been raised in the U.S. that Japan’s export curbs would cause production setback to Samsung Electronics and SK Hynix responsible for more than 70 percent of global memory chips and half of flash memory supplies.

By: DocMemory
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