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S korea-Japan Gloom Raises Concerns of ‘Never Seen Before’ Chip Cost Hike

Memory chip spot costs have risen for the first time in 2019, showing gloomy warnings of “never seen before” spikes and a supply disruption may come to pass as a conflict between South Korea and Japan drags on.

The 15% spike in DRAM chip costs over a week – in a sector dogged by oversupply and weak demand for over a year – comes after Japan contracted exports of several chipmaking materials to South Korea – home to the world’s top two memory chip manufacturers, SK Hynix and Samsung.

The price hike indicated by business tracker DRAMeXchange refers to the spot market that accounts for less than a tenth of the memory chip panorama as most prominent tech companies source via mid- and long-term contracts.

Given this background, major clients such as iPhone maker Apple are yet to begin stockpiling; however, the cost spike has already started stoking fears that Japan’s barriers will soon affect supply, several trade sources stated.

Taiwan Semiconductor Manufacturing CO., the world’s prime contract chip manufacturer, warned that Japan’s export barrier is the “greatest uncertainty” for Q4.

Japan has contracted exports of three chipmaking materials – fluorinated polyimides, utilized in smartphone displays; photoresists used to switch circuit designs on to semiconductor wafers; and hydrogen fluoride, used as an etching gas when engineering chips.

South Korea sourced 94% of fluorinated polyimides, 92% of photoresists, and around 44% of hydrogen fluoride from Japan in the first five months of the year, Korean trade data confirmed.

Seoul has said it’s seeking to make its supply chain extra independent and has been getting new offers from China and Russia to provide hydrogen fluoride.

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Gary Johnson

Gary writes about the main industry, and that is the semiconductor industry. He has worked on-field in the semiconductor industry and hence knows the facts about it. He mainly highlights the progression and also the backdrops of this sector and how this sector will benefit the economy in the near future. His way for writing has attracted many users to go through his articles.

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