[NEWS IN FOCUS] China's export curbs worry chip, display makers

Seoul predicts Beijing's latest export sanctions on key minerals will have limited impact on the Korean economy, but chip and display companies are worried about risks to their supply chain if the restrictions grow protracted.

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Seoul predicts Beijing's latest export sanctions on key minerals will have a limited impact on the Korean economy, but chip and display companies are worried about risks to their supply chain if the restrictions grow protracted.

"Korea's chip industry will not be immediately affected by the export restrictions on gallium and germanium, but we are monitoring closely how it could disrupt the supply chain if the restrictions become a long-term scheme," said a semiconductor industry insider.

Although the use of gallium in Korean-made chips is negligible, germanium is widely used in the production of memory chips, a backbone of Korea's export-dependent economy.

If the sanctions last long, chipmakers in Korea will inevitably have to find substitute sources.

The display industry could suffer even more as gallium is a key mineral in making high-tech panels.

"Gallium is used in advanced products such as high-spec panels deployed on iPhones known as LTPO [Low-Temperature Polycrystalline Oxide] OLEDs as well as on micro-LED panels," said Jo Eun-sook, head of the Industry Policy Team of the Korea Display Industry Association.

"The display industry's inventory can last about six months, but if sanctions continue beyond that, we will need to find a solution."

Finding a replacement for China will not be easy because the gallium imported from the country is cheap and pure, according to Jo.

China accounted for 39 percent of Korea's gallium imports last year, according to the Korea Institute of Geoscience and Mineral Resources. This made it Korea's second-largest source after the United States, which accounted for 46 percent.

As for germanium, China accounted for 89 percent of Korea's imports last year, followed by Russia, Germany and the United States.

Korea's Ministry of Industry held an emergency meeting Tuesday to assess the risks of China's latest export curbs.

"The latest sanctions are expected to have limited impact on sourcing in the short-term," said Joo Young-joon, deputy minister for the Office of Industrial Policy.

"But we cannot rule out the possibility of the sanctions lasting longer and expanding to other items. So, the government plans to closely monitor China's movement and respond swiftly."

On Wednesday, Wei Jianguo, China's former vice commerce minister, told the China Daily that the latest sanctions are "just a start," adding the countermeasures will escalate if restrictions on China's access to advanced technology continue.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]