Japan and South Korea's feud hurts tech

Gadget parts affected by export controls

By Lindsay Isaac, Sophie Jeong and Junko Ogura, CNN Business
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Cell phone radiation and a potential link to cancer risks have left consumers and scientists alike scratching their heads since mobile phones became widely used in the 1990s.

(CNN) - South Korea has warned that an escalating trade dispute with Japan could hurt the global tech industry.

President Moon Jae-in said Wednesday that Japan's decision to restrict exports to South Korea of materials used in memory chips are a "blow to the economy" and threaten to disrupt global supplies.

Japan announced earlier this month that companies would need a government license to export three materials to South Korea. The materials — fluorinated polyamides, photoresists and hydrogen fluoride — are used to make memory chips and smartphones.

The export controls are a massive headache for South Korean firms Samsung and SK Hynix, who between them control over 63% of the global memory chip market, according to the latest figures from the Korea International Trade Association.

South Korean firms sourced 94% of fluorinated polyamides, 92% of photoresists and about 44% of hydrogen fluoride from Japan In the first quarter of this year, data from the association showed.

Samsung, the world's biggest seller of smartphones, said in a statement to CNN Business that it was "assessing the current situation and reviewing a number of measures to minimize the impact on our production." SK Hynix did not immediately respond to a request for comment.

The trade spat is the latest in a series of disputes between Japan and South Korea.

Tensions have been rising for months, stemming in part from Japan's colonial rule over the Korean peninsula in the early 20th century. South Korea's top court recently ruled that its citizens can sue Japanese companies for using forced Korean labor during the Second World War.

Japan's Chief Cabinet Secretary Yoshihide Suga referenced the court ruling in a press conference after the export curbs were announced, but denied the two issues were linked. However, he said the court ruling had damaged the "relationship of trust" and accused Seoul of repeatedly rejecting "long-standing friendly ties between the countries."

The South Korean Ministry for Trade, Industry and Energy has accused Japan of violating World Trade Organization (WTO) regulations and called for bilateral talks to take place Friday.

Kotaro Nogami, Japan's deputy cabinet secretary, pushed back against these claims, saying there was no indication the restrictions were in violation of WTO rules and said they were "necessary for the proper operation of the export control system for security."

He said Japanese officials would hold "working level meetings" with their South Korean counterparts but insisted withdrawing the measures was not under consideration.

South Korean President Moon, who met representatives of major companies including Samsung and LG on Wednesday, said his government was trying its best to achieve a diplomatic solution.

"I hope the Japanese government will respond," he said. "I hope it will no longer go toward a dead end."

Tensions remain high, however, with more than 36,000 South Koreans signing a petition calling on the government to take retaliatory action against Tokyo. Many South Koreans are also calling for a boycott of Japanese products on social media.

CNN's James Griffiths contributed reporting.

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