CONTINUED IMPORTS FROM JAPAN

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Now, it has been a week since Japan imposed restrictions on exports to South Korea, and concerns are rising that the exports of the three core semi conducter materials could be suspended altogether. KBS has found that photoresists, one of the core components of memory chips, which account for more than 80 percent of semiconductors produced in Korea, are still being imported from Japan.

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The semiconductor manufacturing process is similar to photographing. Photoresists are spread over a silicon wafer to make photographic paper. When a light is projected onto the paper, circuits become engraved like photographs. Japan has included photoresists in the list of materials subject to export restrictions. However, because of the ambiguous regulations, it had been unclear if photoresists for D-RAMs, a major semiconductor product in Korea, were also restricted. Even trade authorities had to ask Japan to clarify the scope of its export restrictions. South Korea's Ministry of Trade, Industry and Energy and a semiconductor manufacturing company have found that photoresists for D-RAMs are still being imported to Korea. Another semiconductor maker said that materials for D-RAMs are not subject to export restrictions. It is now clear that Japanese photoresists for D-RAMs and NAND flash memory are still being exported to Korea. This means that there are no problems in the imports of photoresists for memory chips, which account for 80 percent of semiconductors manufactured in Korea, and only materials used in advanced manufacturing processes of non-memory chips are subject to Japan's export restrictions. In other words, the possibility that memory chip production may be halted anytime soon is quite low. However, the problem remains in the non-memory sector, which is regarded as a future growth engine of the Korean economy. Japan's measures apparently target the efforts of Korean companies such as Samsung Electronics to develop and manufacture advanced non-memory products.

[Soundbite] KIM YOUNG-WOO(SK SECURITIES) : "Although it only targets a small part of materials, this strategic measure is intended to show that it can affect the Korean government's efforts to nurture new materials."

Although concerns remain that export restrictions will apply to hydrogen fluoride, another essential material in semiconductor manufacturing, Korean companies say they could replace Japanese materials with their own, as the technological gap between Korean and Japanese makers is not that big.