[Sunday Special]: Prices of Smartphones, TVs may spike worldwide as a fallout of Korea-Japan trade war, says Korea

NEW DELHI: In days to come, the prices of smartphones, LED televisions and computer/flat panel screens may rise. It is because the companies manufacturing these products are set to face an acute shortage of semiconductors and memory chips following an ongoing trade war between South Korea and Japan.

The crucial components required for producing semiconductors and memory chips which are used in mobile phones and LED television/computer/flat panel screens are majorly supplied to South Korean companies by Japanese firms.

World over, South Korea is the major supplier of semiconductors but its companies like Samsung and SK Hynix that account for about 70% of the total global supply of quality semiconductors are set to face a shortage of Japanese components required for producing semiconductors and memory chips.

In a historical move on Friday, the August 2, Japan announced to drop South Korea from its list of trusted economic partners, also called ‘whitelist’. Within a few hours, South Korea too retaliated and announced to drop Japan from its whitelist the same day.

Resultantly, the Japanese exporters supplying components used for making semiconductors and memory chips to South Korea will have to go through additional screening to make sure their goods don’t benefit Korea’s nuclear or missiles production. All this is likely to cause delay of components to Korea if at all the Japanese companies are allowed.

Entire world including India to get impacted:

South Korea has accused Japan of hindering the intricate supply chain the impact of which will be felt not only in Korea but across the world in the days to come.

“I want the international community to realize that it (trade restrictions) will not only affect the two countries Japan and Korea, but many countries would get impacted across the globe. The mobile manufacturing companies in Korea may have to look for alternative suppliers of components, and this may result in an increase in prices of semiconductors as they have to reconfigure the manufacturing process. This will result in a hike in prices of smartphones, TVs and computer screens,” Yoo Chang-ho, the Consulate Minister, Embassy of the Republic of Korea in India said in an exclusive interview with Asian Community News (ACN) Network on Friday.

It is not only the Korean companies manufacturing mobile phones that are going to face the heat but also the ones from China, India, and other countries, and the brands to be impacted may include iPhone, Huawei, Xiaomi, Oppo and many others.

“India hosts the world’s largest smartphone factory by Samsung in Noida. Even though there is currently no effect on the production but there is a potential. The Samsung phones with ‘Made in India’ label are being supplied around the world. Not only the Samsung phones will become expensive but many others too as the majority of the companies get semiconductors from Korea. Even iPhone, Huawei, Xiaomi may get affected,” the Korean consulate minister added.

As saying goes if Saudi Arabia provides oil to the world, Korea provides Semiconductors.

Is it a Kamikaze (suicidal) mission by Japan?

According to Yoo Chang-ho, the Japanese move to slap restrictions on South Korea was equally harmful to Japanese companies as well.

The Korean consulate minister said that the Japanese were playing with fire as the entire thing may reach the dangerous point of no return.

“It not only affects the Koreans business but their own (Japanese) companies as well besides consumers around the world. Post restrictions, the Japanese factories that are supplying components to Korean companies like Samsung and SK Hynix, will go out of business. Japan is killing its own companies. And later, if Japan reverts its decision and restores Korea in the whitelist, then Korean companies may have to again reconfigure the entire process,” said the Korean minister hinting that again the cost of producing semiconductors and finally the smartphones, TVs would escalate.

But all that for what? Japanese government makes the excuse that these components are going to North Korea.

“But such supplies are monitored by the international agencies like UN that act like global watchdog organizations and see what is going where for the making of missiles, nuclear weapons etc,” said the Korean minister.

It’s a Supreme Court ruling, not the government order:

Korea contends that the October 4 development when the Korean Supreme Court held Japanese companies liable for having the advantage of forced labor during World War II, was not a political decision but a verdict by the apex court of the country.

“How the  Korean government can object to the SC ruling? The decision has come out of the well laid judicial process based on the set of laws of the country. And the decision was not of the first or second appellant courts but the SC,” exclaimed Yoo Chanh-ho.

Mediation by US, India or any other country?:

Korea considers the dispute with Japan as a trade conflict and an internal matter between the two neighbors.

“We need all the support we can get whether it is US or India. But we don’t want them to take sides. It is difficult for countries to take sides. No other country is willing to get into it. It’s a kind of norm that countries don’t get into such affairs of other countries,” said the Korean minister. But he hoped that the dispute was resolved very quickly as the market is very unsafe and prices are spiking because of speculations.

Korea and Japan are not enemies:

For South Korea, the ongoing tussle with Japan is nothing more than a trade dispute.

“At the end of the day, it’s a trade dispute. That does not mean that Korea and Japan will become enemies forever. Korea and Japan are neighbors and we go through such things quite often, but at the end of the day, we are very close to each other and need and depend on each other. We have good cooperation at most levels,” said Yoo Chang-ho.

Korea terms the dispute as a dispute between component supplier companies, between the commerce departments of both sides or maybe between the leaders on both sides.

“Temporarily, the people on both the sides might get angry but at the end of the day, my relationship with my friends at Japanese embassy here will not change, our dialogue will not change, and the underline friendship is difficult to change,” asserted the Korean minister.

‘No No Japan’ campaign a handy work of a handful of Anti-Japan factions only:

According to Yoo Chang-ho, there are some factions within Korea who would love to severe all relations with Japan, and they are very anti-japanese organizations.

“They want to portray Japan as Korea’s enemy. They will try and make it as if you buy something of Japanese origin, you are enemies of the state. But I don’t know whether they will be successful. It is up to the ordinary Koren people to make their minds. We haven’t felt any impact of this campaign in India,” claimed the Korean minister.

Background: 

On Friday, the Japanese Prime Minister Shinzo Abe convened a Cabinet meeting and announced the decision of taking South Korea off the Whitelist with 27 countries in it. The South Korean President Moon Jae-in led government too announced to reciprocate the Japnese move and decided to remove Japan of its list of 28 preferred nations.