Samsung rules out artificial reduction in microchip production over Japan's trade retaliation

01, Aug. 2019

(Yonhap News Photo)
(Yonhap News Photo)

SEOUL, AJU - Samsung Electronics ruled out an artificial cut in microchip production despite uncertainties caused by Japan's retaliatory move to restrict exports of key materials used for the production of microchips and displays in South Korea.

Japan strengthened regulations on exports of photoresists, fluorine polyimide and etching gas on July 4. Officials and business leaders have expressed concern about irrecoverable trade relations between Seoul and Tokyo if Japan takes additional measures, including the removal of South Korea from a so-called “white list” of trusted importers.

“The move is not an export ban on materials, but there is a burden under the new licensing process,” a Samsung official said at a conference call on Wednesday. “It is difficult to weigh up due to uncertainty about the direction of progress,” he said, admitting the world's largest microchip producer is establishing “various measures to minimize any negative impact.”

“We are not currently considering an artificial reduction in wafer input,” the official said, predicting a gradual reduction of memory chip inventories in the second half of this year. However, Robert Yi, executive vice president for investor relations, cautioned that it is difficult to give a right outlook due to external uncertainties.

Samsung said the removal of South Korea from a list of trusted buyers would affect a broader range of high-tech materials. Robert Yi, executive vice president for investor relations,

The company said that demand for DRAMs would pick up in the third quarter as data centers adjust their inventory levels and resume purchasing in the peak season. For NAND, mostly used in mobile devices, Samsung expected the market to gradually stabilize from the third quarter.