South Korean chipmaker SK Hynix warns of supply disruption in prolonged Japan export curbs

26, Jul. 2019

SEOUL, NNA - SK Hynix Inc., the world's second-largest chip maker, on Thursday warned that it would curb production of its flash memory amid the slow recovery in global semiconductor demand and South Korea’s trade dispute with Japan.

The South Korean firm also reported that its operating profit tumbled 89 percent from a year earlier to 637.6 billion won ($537.5 million) in the April-June quarter, nearly a three-year low.

“We cannot rule out the possibility that we will have problems in our production if the regulation lingers on,” Chief Financial Officer Cha Jin-seok told analysts in a conference call.

Tokyo has imposed restrictions requiring Japanese suppliers to obtain government approval for export of three key materials -- hydrofluoric acid, photo resists and polyimides -- to South Korea, citing national security concerns. Japan is also considering excluding Seoul from its “white list” of export destinations next month, news reports said.

Hydrofluoric acid and photo resists are key materials in producing chips, while polyimides are used in manufacturing display panels.

SK Hynix said this will lower its NAND flash wafer output by more than 15 percent this year from the previous year, a significant production cut compared to the 10 percent reduction planned earlier.

The South Korean company also said it will shift some chip-making lines at its Incheon factory to produce semiconductor image sensors.