For the past few weeks, Japan and South Korea have suddenly fallen into a commercial war that has almost nothing to do with the war President Trump launched against Chinese corporations. The war is likely to have a major impact on Japan's components and supporting industries, affecting Samsung Electronics, and the global supply chain of smartphones and computers.
After all, the commercial war of 2019 was the result of the actions that Japan caused during World War II for Korea. There is a dark side in the history and relationship of these two countries, which has not been healed yet. That dark side involved Korean women, in the 30s and 40s of the last century being captured for Japanese fascists. From time to time, now the last women of that era are already living in the last months of their lives, and Korean men are no different, having to work compulsory is no different. slaves in Japanese wartime factories.
At the end of last year, the Korean Supreme Court ordered Mitsubishi to pay a huge compensation to Koreans who were forced to work during the Japanese occupation of Korea in World War II. identical to the decision of the Korean Supreme Court for two steel firms Nippon Steel and Sumitomo Steel a few weeks earlier.
While the Korean judicial system tried to find adequate compensation for its people from Japanese companies, the Japanese did not sit still. Prime Minister Shinzo Abe and his cabinet responded by applying trade sanctions to South Korea, more specifically the high-tech industry on the grounds of "national security." They said that Seoul did nothing to heal the relationship between the two countries.
Last week, Japanese and Korean officials met to try to resolve the tension, but did not reach consensus. And Japanese technology embargo against Korean partners is still enforced, affecting the supply chain of many electronic products. Take Samsung Electronics for example. The Korean company is the world's largest DRAM chip manufacturer, accounting for 40% of the market share worth 100 billion USD, and they are also the world's largest NAND flash chip manufacturer with 35% market share. . The second largest group, SK Hynix, is also South Korea with about 31% market share. Samsung and many other Korean manufacturers are also leading many other technology markets, such as semiconductors or LCD screens.
To do this, Korean corporations need the help of supply chains from Japan a lot. The Japanese side produces optical compounds and materials for the semiconductor industry, even making both equipment and components for the Korean side to produce. For that reason, the trade embargo that Japan applies to Korea is threatening both Samsung and SK Hynix. It was a wake-up call for President Moon Jae In, to what extent his country's economy depended on its neighbors, and called on him to come to an agreement with his Japanese counterpart, Mr. Shinzo. Abe.
Of course in the middle of a commercial war, there are always positive effects that not many people think of. First, DRAM prices have dropped to record levels, directly affecting Samsung Electronics' revenues, making them the worst financial reports in the last four years. Samsung's share price from August last year to January 2019 has dropped by a third. Thanks to Japan's embargo, the supply of DRAM suddenly fell sharply, and prices began to climb again. Those who benefit from this effect, none other, are Samsung. Thanks to Japan, in just a few weeks, Samsung's stock has nearly returned to the price of this range last year.
In other words, Japan's commercial attack is like a stimulus for South Korea itself.
These short-term impacts and consequences, please repeat, are only short-term. According to Nikkei Asian Review, "any change in the EUV optical supply chain, an external lining product, used in lithography to create semiconductor processing chips, can be making the plan to launch Samsung's 7nm processor is stalled. "Of course, Samsung has pre-empted a number of products they need, but if Japan and South Korea cannot find a common voice, Samsung will suffer. influence because supply chains do not work as they want.
Since then, Samsung's memory chip, screen panel and new-generation processor chips will plummet. These components also reduce sales, which means device, computer or smartphone manufacturers will also be affected.
So what lessons does this case bring? First of all, you may think that Korean men and women trampled in World War II have nothing to do with the technology supply chain between Korea and Japan of 2019, but in their eyes politicians, everything thought not to be the cause – the consequences can also be brought to the advantage of the negotiating table.
Second, global supply chains are becoming more fragile than ever. Just as Huawei realized how difficult it was for them to rely too much on American technology for years, Korean companies also realized the same thing when dependent on technology and Japanese products when developing one of the most important industries for them.
Thirdly, amid the development of the 5G equipment and technology race is going on very hotly, the current moves of many countries are making the speed of 5G application in the world become slower. The US has put Huawei in the right spot because of the Chinese 5G technology, but Samsung is also studying the development of 5G infrastructure equipment, and it is also under the commercial war between Korea and Japan threatens. As wireless telecommunications technology is becoming increasingly important to the global economy and entertainment over the years, having a large market share in the 5G device market suddenly becomes a target not only. economic, but also political for many corporations and countries.