JAPAN'S PREFERENTIAL TRADE STATUS

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Now Japan only has to obtain cabinet approval before stripping Korea off its preferential trade status. Subsequently, Korean materials producers are stepping up their efforts to supply materials locally, without having to export it from Japan. But this doesn't seem too easy as the technological gap between Korea and Japan in the parts and materials sector is too wide, and local development requires much funding. Here is a look at some of the companies that are working furiously to produce the needed materials within Korea.

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A factory that produces essential materials for semiconductors. Workers must put on masks and dust-free garments then go through air shower before entering the production area. This is where photo resist applied on the semiconductor circuit boards is produced. Photo resist is among Japan's list of export control items. This company has devoted 30 years to the R&D and production of that material. However, it has minimal presence in the domestic market since the firm started as much as 20 years later than its Japanese counterparts. Japanese companies control 90% of the global photo resist market. The PR for next-generation semiconductors are entirely from that country. The Korean government belatedly started assessing the situation.

[Soundbite] JOO HYEON-SANG(KUMHO PETROCHEMICAL) : "A study to assess demands is underway to procure equipment as quickly as possible."

The local firm has several obstacles to overcome. It needs about two or three years to catch up with the level of Japanese technology and more than 100 billion won just to purchase the needed equipment. What is the situation like for hydrofluoric acid, another restricted item? This is the only place in Korea that produces 99.9%-pure hydrofluoric acid. Korea's hydrofluoric acid dependence on Japan is 44%. Tests are underway to determine whether it can be replaced with locally-made material, but more time is needed to develop hydrofluoric acid with a purity level of over 99.999%. Fluorine polyimide used in foldable screens is another restricted item. Fortunately, a local company is ready to mass-produce this material, so the problem isn't as dire in this front. Materials companies are working hard to turn this crisis into an opportunity. But most agree that large conglomerates and the government must join them to build a long-term cooperative relationship to fundamentally deal with such problems.