DOMESTICALLY PRODUCED HYDROGEN FLUORIDE

[Anchor Lead]

High purity hydrogen fluoride is one of the three materials that was included in Japan's export restrictions on Korea. It is also the most difficult among the three to replace or produce locally. Samsung Electronics has reportedly begun a partial use of domestically produced hydrogen fluoride in its semiconductors. As such, the localization of semiconductor materials in Korea, is gaining speed faster than expected.

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This firm imports high purity hydrogen fluoride from Japan and delivers it to semiconductor companies in Korea. After Japan imposed restrictions on Korea-bound exports, the firm began to test alternative products made of materials from other countries such as China. It has been found that hydrogen fluoride supplied by this and other domestic firms has been used in the manufacturing of Samsung Electronics' semiconductors since last week. Samsung has begun using the material in some of its products, and plans to gradually expand its use starting from the least sensitive items. The replacement of Japanese imports was initially expected to take up to six months, but in reality it began in a two months' time. SK Hynix also plans to introduce domestically produced hydrogen fluoride soon, while LG Display is already partially using it. The localization process is gaining speed, with two Korean manufacturers of hydrogen fluoride planning to expand their production facilities in the near future. However, it will take some time before the Japanese imports are replaced completely. That's because the existing manufacturing processes are optimized for Japanese materials, which are also cheaper.

[Soundbite] DO HYUN-WOO(NH INVESTMENT & SECURITIES) : "Rather than replacing Japanese products 100 percent, domestic materials will be first used partially in existing processes. Once their quality is recognized, their use will be expanded gradually to the newly developed processes as well."

Meanwhile, Japan has issued a statement saying that Korea's decision to remove Japan from its whitelist was an act of retaliation. However, the Korean government brushed away the accusation by saying that it's simply a measure of strengthening export control on countries that are hard to cooperate with internationally.