Refile: S.Korea eyes investing $854 mln annually in chip supply chain after Japan's export curbs

TEMC CNS Co

03/07/2019 03:58

(Corrects third last paragraph to add dropped word
"government")
    SEOUL, July 3 (Reuters) - South Korea will seek to invest 1
trillion won ($854.41 million) annually in developing home-grown
materials and equipment used to produce micro-chips, a senior
ruling party lawmaker said on Wednesday, after Japan tightened
curbs on exports of some high-tech materials to the country.
    Japan said on Monday it would tighten regulations on exports
of materials used in smartphone displays and chips to South
Korea amid a widening dispute over South Koreans who were forced
to work for Japanese firms during World War Two. urn:newsml:reuters.com:*:nL4N2430NL
    "We are doing a preliminary feasibility analysis (on the
investment)," Cho Jeong-sik from the Democratic Party told
reporters after meeting with officials from the presidential
office and government ministries to discuss a response to
Japan's decision.
    The export curbs could hamper production of South Korea's
chip giants Samsung Electronics  005930.KS  and SK Hynix
 000660.KS  as the two chemicals targeted are essential,
analysts say.
    Data firm IHS Markit said on Wednesday the Japanese trade
restrictions against South Korea would add to global trade
tensions. Asian exporters are already being strained by a
prolonged slowdown in the global electronics sectors.
    "A reduction or elimination in the availability of these
materials will significantly impede the production of memory and
other semiconductor chips, impacting major semiconductor
manufacturers including Samsung Electronics and SK Hynix," Len
Jelinek, executive director of semiconductor research at IHS
Markit, said in a note.
    Japan's industry minister said on Tuesday that its decision
to tighten controls was not in violation of World Trade
Organization (WTO), rebuffing South Korea's earlier claims.
    Cho, the South Korean ruling party lawmaker, shrugged off
criticism in local media that the government is not laying out
countermeasures swiftly. But he did not provide further details
on the nature of the spending.
    Shares in South Korean chip materials makers jumped after
the government's spending plan was made public.
    Shares of Ram Technology  171010.KQ  and Ocean Bridge
 241790.KQ , local firms producing chemicals used in chip
manufacturing process, rose as much as 20% and 15%,
respectively.
($1 = 1,170.4000 won)

 (Reporting by Ju-min Park and Heekyong Yang; additional
reporting by Hyunjoo Jin and Hayoung Choi; Editing by Kim
Coghill)
 ((ju-min.park@thomsonreuters.com; +82 2 3704 5650; Reuters
Messaging: ju-min.park.thomsonreuters.com@reuters.net))