No OLED screens for Japan if trade dispute is ‘pushed to extreme’, South Korean engineering expert warns

A block on OLED screen exports could mean Japanese electronics firms ‘would not be able to sell high-end TV sets due to a shortage of panels’, said chips expert Park Jea-gun
Park’s comments came as Seoul said it would retaliate after Tokyo restricted exports of chemicals critical to South Korea’s production of mobile phone displays and semiconductors

Japan

Julian Ryall

Published: 7:00am, 6 Jul 2019

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If South Korea “pushes things to the extreme” in its trade dispute with Japan, Seoul could limit exports of organic light emitting diode (OLED) screens that companies such as electronics giant Sony need, an engineering expert has warned.

In such an event, Sony would not be able to sell high-end television sets due to a shortage of panels, Park Jea-gun, president of the Korean Society of Semiconductor and Display Technology, told the Korea JoongAng Daily.

“Semiconductors sold to Sony and Sharp can also be stopped. This will invariably create problems for them in electronics and smartphone production,” he added.

The comments by Park, a renowned chip expert and professor who teaches semiconductor engineering at Hanyang University, came as Seoul warned it was looking into “corresponding measures” against Tokyo for restricting exports of three chemicals critical to South Korea’s production of mobile phone displays and semiconductors.

South Korea exports some US$3.72 billion worth of electrical and electronic components, including OLED panels, to Japan each year. Its other exports to its neighbour include industrial machinery, boilers, organic chemicals, and optical and medical equipment.

Japanese electronics firms on Friday declined to comment on the likely impact of any export curbs by South Korea.

“We do not confirm our suppliers’ names or where we procure our components from, so we are not able to comment on these reports,” an official from Sony said. “All I can say is that we are monitoring the situation carefully.”

A spokeswoman from Panasonic said: “All we can say right now is that we are keeping a close eye on the situation.”

A customer at an electronics retailer in Tokyo. Photo: Reuters

Martin Schulz, senior economist for the Fujitsu Research Institute in Tokyo, said Japanese companies were vulnerable to any move by South Korea to limit exports of panels and memory chips.

“South Korea does not have a monopoly, but it would be hard to replace them quickly,” he said, adding that Japanese companies in recent years had stopped manufacturing those items.

While Seoul had accused Tokyo of contravening rules of the World Trade Organisation (WTO), which nations are members of, Schulz said its complaint would not hold much water because Japan had not stopped exports entirely.

“The WTO is unlikely to say that its rules have been broken because Japan has just tweaked the details of its export controls to delay export procedures and taken Korea off the preferred trading partner list,” he said.

Similarly, South Korea would not be violating WTO rules if it imposed new restrictions rather than a blanket ban on exports, he said.

Both he and Park urged Seoul and Tokyo to find a resolution to a dispute that stems from worsening bilateral tensions caused by, among other things, a row over wartime forced labour.

Park said he was most concerned about Japan’s restrictions on photoresists, which are used to make memory chips and high-end products such as application processors used in smartphones. About 92 per cent of what South Korea needs comes from Japan, according to the Korea International Trade Association.

Three Japanese companies supply photoresists for the high-end products and “apart from them, there’s practically no alternative”, Park said.

South Korea’s semiconductor industry could stay afloat for four months with limited Japanese materials, but beyond that both importers and exporters would suffer, he said.

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