Samsung Electronics Vice Chairman Lee Jae-yong is extending his trip to Japan to resolve any potential fallout from the neighboring country's tough regulations for shipments of key materials used for chip and display productions, industry sources Tuesday.
Lee, the de factor leader of the South Korean tech giant, arrived in Tokyo on Sunday, three days after Japan implemented tougher export rules against Seoul on high-tech materials used for making chips and displays.
|Samsung Electronics Vice Chairman Lee Jae-yong departs from Gimpo Airport in Seoul for his trip to Japan on July 8, 2019, to discuss possible countermeasures against Tokyo's export restrictions on key materials needed in chip and display making.|
Lee has been scheduled to attend a group meeting with the heads of conglomerates on Wednesday, arranged by the presidential office of Cheong Wa Dae, to discuss a strategy on Japan's export restrictions, but he may skip the gathering, as the tycoon is scurrying to meet Japanese business partners, according to the sources.
Samsung Electronics declined to comment on Lee's trip, noting the company's business strategy can't be discussed amid sensitive diplomatic issues between the two nations.
Japan's Nikkei reported earlier that Lee is expected to request Japanese business partners to ship high-tech materials from overseas factories to avoid the new trade restrictions and discuss other possible countermeasures.
All-Nippon News Network (ANN) also reported that Lee is arranging meetings with executives from Japanese banks and semiconductor companies on Thursday.
Ahead of Japan's export curbs that went into effect last Thursday, Samsung sent a letter to its foundry clients, promising to make sure shipments of their products would be made within their planned supply schedule.
The reports are fueling speculation that Lee may not attend President Moon Jae-in's planned meeting with chiefs of South Korea's top conglomerates to discuss countermeasures against Japan's export curbs.
Samsung has been facing growing headwinds from global trade as a trade spat between the United States and China and Japan's export regulations on South Korea have added uncertainties to its business, already grappling with weak earnings due to a memory chip supply glut, its main source of income.
Last week, the world's largest chip and handset maker said it expects operating earnings to more than halve in the second quarter from a year earlier amid the weak memory chip and handset market.
Market watchers said a supply glut in DRAM and NAND flash chips, which account for more than two-thirds of the firm's sales, dragged down its profitability, expecting the slump to continue in the second half in the wake of Washington's ban on Huawei, a major client of Samsung's memory chips.
Adding to the woes is Japan's export restriction against South Korea for high-tech materials needed for semiconductor and display manufacturing.
Samsung is a major buyer of Japanese chemical companies producing fluorine polyimide used to make flexible OLED displays, as well as resist and etching gas needed in the semiconductor fabrication process.
Industry watchers say the export curbs could disrupt the supply chain of South Korea's semiconductor and display industries if the Japanese government deliberately takes its time in the review process -- possibly up to 90 days.
Japan produces about 90 percent of the world's fluorine polyimide and resist and 70 percent of the etching gas, forcing Korean buyers to find alternatives if the restrictions are adopted broadly and for an extended period.(Yonhap)
Cho Kyung-Hee firstname.lastname@example.org