South Korean chipmakers are accelerating their search for alternatives to avoid disrupting global supply

South Korean chip and display makers are redoubling efforts to find alternatives to three chemicals that Japan cuts off from South Korea to complete their chip and display testing next month to avoid disrupting global supplies.

Samsung Electronics and SK Hynix , which account for more than 60% of global memory supply , and LG Display, the dominant OLED producer, are actively looking for alternatives to fluorinated polyimide, photoresist and hydrogen fluoride, three chemicals Tokyo has been restricting since last month for unspecified "safety" reasons, industry sources said on Tuesday.

Since July 4, Japanese companies exporting these three products have had to obtain government approval every time they export to South Korea. Since then, no shipments have been approved.

Testing of new materials will take up to six months, but South Korean manufacturers are reportedly working to complete the first round of tests on non-Japanese sources by the end of September.

Market research firm DRAM eXchange estimates that Samsung and Hynix have only 2.5 months' worth of Japanese hydrogen fluoride, an etching gas necessary for chip cleaning.

They have reportedly obtained alternative materials from South Korea, Russia and China, but it remains uncertain when they can be safely used on factory production lines.

Sources of high-tech materials imported by South Korea

According to the Korea International Trade Association, South Korean manufacturers sourced 94% of fluorinated polyamide, 92% of photoresists and 44% of hydrogen fluoride from Japan from January to May this year. China accounted for the largest share of hydrogen fluoride supply, with South Korean companies getting 46.3% of hydrogen fluoride raw materials from Chinese companies during the period.

Japan has tightened shipments of the three materials to South Korea since July 4, suspecting that some of them may have violated UN sanctions and ended up in North Korea. South Korea immediately retorted that the claims were unfounded.

The Japanese government on Friday formally removed South Korea from its “white list” of trade allies that enjoy fast-track customs clearance procedures, a move that will require more than 1,100 strategic and sensitive items to undergo more complicated customs procedures when shipped to South Korea.

Seoul sees the recent series of actions by the Japanese government as punishment for a South Korean court ruling last year that ordered Japanese companies to compensate South Korean workers who were forced to work before and during World War II.