Another week, another Trade war. And Unlike most commercial wars these days, This origin did not originate from the borders of the Rose Garden with Marin Wen birds in the background. No, like any MIM worthy of the Ice Bucket challenge, others are involved in a commercial war vehicle and make it their own.
Cue Japan and South Korea. The two countries have entered their trade war over the past few weeks, a conflict that now threatens the foundations of the Japanese suppliers' industry, Samsung Electronics, Global smart phones and computer shipments.
But why trade conflict? If the trade war between the United States and China has emerged from the dark recesses of President Trump's mind, this new trade war emerges from the dark chapters of Japan and Korea's collective and sad history.
One of the sad ones in these chapters is the plight of Korean comfort women – women who were forced into Japan's wartime sexual slavery in the 1930s and 1940s to serve soldiers throughout the Japanese Empire. Given the history of these atrocities, many of these women are now reaching the later stages of their lives, as are the men who were impressed by wartime work in Japanese factories to fight the Allies.
Late last year, The highest court in Korea ordered the Mitsubishi Corporation Mainly for the slave's use of slave labor throughout the Japanese occupation and World War II, a reversal of the court's previous judgment against Nippon Steel & Sumitomo Metal a few weeks ago.
Since the Korean court system has tried to recover these compensation from Japanese companies, Japan has not yet sat down. Prime Minister Shinzo Abe and his government Responded with a broad trade embargo On South Korea's high-tech goods under "national security", arguing that Seoul has failed to find a way forward to repair the fences between the two countries.
last week, The two countries met to try to resolve tensions, But failed to agree on a solution. This leaves the export ban in place, jeopardizing the supply chains of many electronic products.
Take Samsung Electronics, for example. The Korean company is The number one manufacturer of DRAM memory chips, Accounting for more than 40% of the market nearly $ 100 billion, and also the number one manufacturer of NAND flash chips, with 35% share. SK Hynix, another Korean company, was the second largest producer of DRAM chips with a share of nearly 31%. Samsung and other Korean manufacturers are also market leaders in industries such as semiconductors and LCD screens.
Korean electronics companies have deep supply chains in Japan, which produce everything From chemicals and light-resistant materials to semiconductors to the actual manufacturing equipment and parts needed to operate the plants. Thus, the Japanese trade blockade was expected to lead to bargaining on two of Korea's leading manufacturers, punch Korea's fragile economy And a wake-up call to President Moon to reach a compromise with Prime Minister Abe.
Except, as is often the case in the turbulent world of trade, the export ban has had unexpected positive results.
The expected abundance of DRAM chips this year has pushed prices to new levels, Reduce profits at Samsung Electronics In the company's worst fall in four years. The company's shares were hit: from August last year to January, the company lost a third of its value.
Japan then mediated. DRAM supply suddenly drops – and prices go up in turn. The Wall Street Journal reported ThursdayJapanese restrictions already support the memory chip market and lead to better-than-expected results for Samsung and other Korean manufacturers. Although a few weeks have passed, Samsung Electronics' share price has now almost returned to where this time last year was.
In other words, Japan's punch was like an incentive. He shouts.
These short-term gains may be amusing for trade policy observers, but any short-term returns are likely to be of course. The news is much worse for semiconductors. Also noticed Nicky's Asian review this week"Any fault with the EUV – a coating product used in the ultrastructural ultraviolet lithography of more complex semiconductors – could hamper Samsung's plans to launch its 7 nanometer chips throughout the year." Some materials are stored, but if the commercial war extends from weeks to months, eventually they will have to give up the damage to the supply chain.
All this means that what started as a trade conflict could turn into shrinking amounts of next-generation memory chips, displays and semiconductors – in other words, everything you need to create a computer or smartphone today.
There are a few lessons for the technology industry here. First, while the Silicon Valley and other technology areas have a predominantly historical view, world precedents are always under the surface. The status of comfort women may seem appropriate to the daily challenges of building a hardware product, but politics – especially visceral humanism – has a way of interacting outside its purview.
Second, even in a globalized world where national politicians long for economic growth (and certainly Prime Minister Abe and President Moon invest heavily in the development of their respective economies), cross-border supply chains and networks are increasingly fragile. just us Huawei discovered the risks of dependence on US technology Over the past year, Korean companies are now recognizing the risks of relying on Japan's advanced technology industry for important components.
Thirdly, the development of the standards for 5G wireless technology and its associated devices is increasingly being beaten. Huawei specifically targeted more than 5G, but also Samsung It has 5G modems and network equipment running, Which is now threatened by the trade war between Japan and South Korea. Since wireless technology has become essential to international trade and entertainment over the past few decades, the political importance of controlling this technology has grown exponentially.
In the end, what is the solution to this new business war? Well, that's part of the challenge. President Moon does not want to agree to a quick truce, fearing that such rapid negotiations seem to yield to Japan's symbolic demands that he is unlikely to accept. At the same time, Prime Minister Abe is facing the opposite forces. The Japanese government has maintained that all claims for compensation for women in comfort and servitude in wartime have been settled through bilateral trade agreements between the two countries since the 1960s and other diplomatic agreements.
However, both politicians need economic growth to succeed, and the concession of leading companies to sell their leading exports is not a way to achieve this result. They are both an initial leader, but both are practical in the end. Until that happens, the State Department may not be the one that deals across the line. No, it may be time for Tim Cook on his iPhone and talking about iPhone.