Japan's tightening of three key semiconductor exports will not be disrupting South Korea's chipmakers because its government is securing substitutes and putting in money so they can manufacture what they used to import from Japan.
A source said that Korean chipmakers have found solutions both in the country and abroad.
Another source also said that though no one can relax yet, it is not likely that semiconductor production will get cut or suspended.
South Korea's SK Hynix, the world's second-largest memory chipmaker after Samsung and the world's 3rd-largest semiconductor company said it planned to cut DRAM production last month because of the oversupply of DRAM and not because of the expected shortage.
Japan tightened export regulations by asking Japanese chip and display material makers to get individual approval first when they export to Korea items like fluoride polyimide, high-purity hydrogen fluoride (HF) and photoresist.
The application process takes 90 days.
Fluoride polyimide is used for smartphone displays and high-purity hydrogen fluoride (HF) is used as an etching gas for chip cleaning.
HF cuts away unnecessary parts leaving only patterns of semiconductor circuits.
Both fluoride polyimide and HF are going to be produced by local suppliers soon according to industry sources.
Park Young-sun, minister for small and medium enterprises and startups, said that the situation for polyimide and etching gas is at that stage "where you can rest now."
The Korean government said they already found substitutes in five countries.
Korean chipmakers had already started to use locally made etching gas with a local vendor's facility expansion happening soon.
However, experts are quick to point out that using new materials can lead to poor quality during the early stages.
Photoresist, another tightened export material, is for the EUV (extreme ultraviolet) process to manufacture semiconductor substrates.
The EUV process is for refining circuit width.
The Japanese government allowed export of photoresist only twice since it became strict with its exports.
Likewise, Samsung already secured this material through a joint venture.
Korea got dropped from Japan's "white list" in trade following the strengthening of its export regulations of semiconductor materials.
This tightening of regulations includes 1100 items.
Though this is not a total export ban, there is uncertainty because the range is extensive.
The Korean government and the Korea Chamber of Commerce and Industry together with the Federation of Middle-Market Enterprises of Korea said that though there are 11 industries that could be affected, "there has been no damage yet."
To show support in the alternative import sources, the Korean government will have a 24-hour customs clearance when importing items from Japan with a 40% tariffs cut.
Likewise, 270 billion won (US$224 million) will be used to develop technologies in equipment, facility, materials, and parts for the production of goods that are in Japan's export control list.
The Korean government also said that the budget for this will be greatly increased next year.
