Apple, LG, Samsung, Huawei and others could be collateral damage from the latest trade battle

Apple, LG, Samsung, Huawei and others could be collateral damage from the latest trade battle
While an uneasy truce settles over the U.S.-China trade war, there are now animosities being hurled by Japan against South Korea and vice versa. And companies like Apple, Huawei, LG, and Samsung could be caught up in the crossfire. As we told you late last month, starting today Japan is restricting the export of fluorinated polyimide and resist and high-purity hydrogen fluoride (HF) to South Korea. These materials are used in the production of smartphone displays in the country by LG and Samsung, and to manufacture memory chips by Samsung and SK Hynix Inc. Japan accounts for 70% to 90% of the world's supply of these materials.

Japanese exporters will now require permission from the government to ship the aforementioned materials to South Korea, a process that could take up to 90 days for each request. This could slow the production of OLED panels produced by LG and Samsung for the Apple iPhone and other customers. It could also negatively impact LG and Samsung's production of displays and components for their own devices as well.

The fight started over a ruling made last October by the South Korean Supreme Court. The Court ruled that Japan must pay hundreds of thousands of dollars in compensation to South Koreans who were forced to work for Japan's Nippon Steel during World War II. Today, Reuters reports that the Koreans are ready to retaliate. South Korean Trade Minister Yoo Myung-hee said that the actions taken by the Japanese government could pose a huge threat to the global supply chain. And if there's one thing that tech companies should have learned from the U.S. ban on Huawei, it is the importance of having an open supply chain.

Apple and other manufacturers could face shortages of OLED panels this year

Right now, the only retaliation that South Korea can even consider taking is "diplomatic countermeasures," including filing a complaint with the World Trade Organization (WTO). Yoon Do-han, press secretary to South Korean President Moon Jae-in said in a statement, "We will explain to major countries about the unfairness of Japan’s action and the fact that this violates the principle of free trade." However, South Korean Finance Minister Hong Nam-ki said that it might take a long time for the WTO to make a ruling on the dispute. In the meantime, Apple, Huawei, LG, and Samsung could suffer collateral damage.

Not too many suppliers can handle deliveries of OLED panels in the quantity and quality that Apple orders, and if this battle between the two nations lingers, it can have a serious impact on 2019 iPhone production. While Apple does source LCD panels for the iPhone XR and older models from Japan Display, the latter has not been able to prove that it can handle the kind of OLED production Apple demands. Sure, Japan Display manufacturers the AMOLED screens used on the Apple Watch, but those panels are extremely small compared to the larger screens required for the iPhone. Apple did recently agree to invest $100 million in Japan Display and give the company some additional orders for LCD panels that were originally supposed to be produced in China.

With speculation that the 2020 redesigned iPhones will all sport OLED screens, Apple might want to explore the possibility of moving some of its OLED production out of South Korea as a precaution. Even if Japan and South Korea patch up their relationship, it is becoming apparent that smartphone manufacturers cannot afford to rely on suppliers in just one or two countries to keep a steady stream of parts and software coming.



1. User123456789

Posts: 1345; Member since: Feb 22, 2019

Companies will have to buy LCD from JDi and Sharp and Oled from Sharp if things dont change. :)

3. drunkenjay

Posts: 1703; Member since: Feb 11, 2013

lcd in 2019 yikes.

8. mackan84

Posts: 682; Member since: Feb 13, 2014

Yeah Apple just released a $5000 dollar lcd monitor for actual professionals... Nuts! ;)

2. Dr.Phil

Posts: 2512; Member since: Feb 14, 2011

It should be noted that the reason Japan is resisting making these payments is because there was a 1965 treaty that was signed which normalized relations between South Korea and Japan that included a one time payment from Japan to make up for it's past misdeeds. The treaty was written to include any claims with regards to actions from before 1965 to be settled completely and finally with the payment. South Korea is arguing that the treaty only covers the Japanese government and not the Japanese companies at fault.

5. drunkenjay

Posts: 1703; Member since: Feb 11, 2013

japan shouldn't involve trade with politics. it will cause sk to rely on china which further distances japan from china and korea. this is hurt japan in terms of exports as well as other countries.

6. Dr.Phil

Posts: 2512; Member since: Feb 14, 2011

I think it would be very hard considering Japan owns a good amount of companies in China that produce these materials. A lot of them are subsidiaries of the Japanese companies.

7. lyndon420

Posts: 6915; Member since: Jul 11, 2012

All this China and Japan stuff... I think it's all just a big push to get a full blown w@r going again with some other country. The economy is in such poor shape... we're due for another big military presence like a w@r (or maybe even c¡vil w@r).

9. jacky899

Posts: 434; Member since: May 16, 2017

Yep people just dont realize how much ownership Japan have over Chinese companies. Even China's national treasure, Alibaba, is mostly owned by Japan.

4. djcody

Posts: 239; Member since: Apr 17, 2013

Happy 4th of the july America :)

10. jacky899

Posts: 434; Member since: May 16, 2017

I think if this affect Apple in any significant way, the US will step in and require SK and Jp to ammend relationships. They are essentially vassal states to the US

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