In the high-risk world of semiconductors, materials are crucial. In South Korea, this issue became a national priority after the trade dispute with Japan in 2019, which had a huge impact on the country's technology industry at the time. In a tit for tat confrontation, Japan imposed export restrictions on key chip manufacturing materials such as photoresist, hydrofluoric acid, and polyimide. Due to Japanese companies controlling over 90% of global supply, this measure threatens South Korea's chip production and exposes its deep dependence on foreign suppliers.
With subsequent development, South Korea has launched a nationwide plan aimed at achieving localized production of necessary materials. Significant progress has been made, with companies including Dongjin Semichem, Sanyang NC Chem, and SoulBrain establishing domestic production capabilities for photoresist, high-purity hydrofluoric acid, and polyimide, thus occupying the professional market field.
According to reports, South Korea's dependence on Japanese photoresist imports has decreased from 93.2% in 2018 to 65.4% in 2024. During the same period, South Korea's imports of high-purity hydrofluoric acid from Japan decreased by 62.5%, from $160 million to $60 million.
However, South Korea still faces significant challenges in achieving self-sufficiency in cutting-edge semiconductor technology. There are two main forms of hydrofluoric acid used in semiconductor manufacturing: liquid (wet) and gas (dry). Although South Korea has successfully localized the production of wet hydrofluoric acid, dry hydrofluoric acid, which is crucial for advanced lithography nodes, is still controlled by Japan due to its significantly higher technological complexity and supply chain barriers.
There is also a similar gap in the photoresist market. South Korea has made progress in ArF photoresist, which is used in older manufacturing processes within the range of 10nm to 130nm. However, in the field of extreme ultraviolet (EUV) photoresist competition, which is crucial for chips smaller than 7nm, South Korea still lags behind. Japanese companies TOK, JSR, and Shin Etsu Chemical dominate this market, controlling a total of 97% of the market share, leading to South Korea's heavy dependence on imports.
The relative success of South Korea in localizing semiconductor materials is closely related to the depth of its domestic chip manufacturing ecosystem. With industry giants Samsung Electronics and SK Hynix at its core, the country's supply chain extends to over 700 companies involved in components, equipment, chemicals, and mechanical engineering.
Only a few countries/regions, such as South Korea, the United States, Japan, Chinese Mainland and Taiwan, China, have integrated semiconductor supply chains covering all stages from raw material procurement to final packaging.
Analysts say that South Korea's advantage lies in its strong domestic demand and long-term manufacturing expertise. The close relationship between major chip manufacturers and local material developers plays a crucial role in cultivating suppliers capable of competing on the global stage.
Despite progress in building a semiconductor ecosystem, South Korea still heavily relies on foreign technology in several key processes. EUV lithography machines - crucial for producing chips below 7nm - remain the exclusive domain of Dutch manufacturer ASML. Key front-end processing tools, such as deposition and etching equipment, are led by Tokyo Electron (TEL) from Japan and American giants Applied Materials and Panlin Group.
In terms of core materials, such as CMP polishing solution, EUV photoresist, and blank masks for EUV lithography, over 90% of South Korea's supply still comes from abroad. Although domestic companies such as KC Tech and S&S Tech have launched research and development efforts to narrow the gap, industry experts indicate that there are still significant technological barriers.
Industry insiders point out that early R&D programs supported by the South Korean government often focused on low-risk projects with higher success rates, rather than the more complex and high-risk innovations required for the next generation of chips. Analysts believe that South Korea must now shift towards more proactive, state led investments in high-risk, high return technologies - especially in areas where import substitution may never be fully achieved, but strategic resilience is crucial.
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