Japan and South Korea are part of a complex and tightly linked supply chain that produces electronic goods such as smartphones and laptops.
For now, the two South Korean suppliers have "high" levels of semiconductor inventories that they can rely on, according to analysts from Citi. But when that's drawn down, the chipmakers could have trouble meeting production deadlines if they fail to find alternative suppliers of the three chemicals in time.
Still, any prolonged disruption of Japanese exports of the crucial chemicals to South Korea could cause a global shortfall in memory chips supply, and as a result, push up prices, warned Biswas from IHS Markit. "If supply constraints arise in South Korean memory chip production, the price of memory components could significantly increase due to the inability of the other memory suppliers to meet global demand," said Biswas.
Relations between Japan and South Korea have not always been warm. The Asian neighbors share a bitter history dating back to the Japanese colonization of the Korean peninsula from 1910 to 1945 during the World War II period.
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