The aggravation of relations between South Korea and Japan may lead to lack of key components of smartphones. According to some reports, Samsung has already reduced the production of Exynos chips by 10%. This writes CNews.

The impact of a trade war between South Korea and Japan on their own experience felt the tech giant Samsung Electronics, who was forced to reduce production of chipsets, designed for the future flagship smartphone. This Galaxy Note 10, official presentation of which is scheduled for August 7, 2019, may be in short supply.

According to the statement of an unnamed representative of Samsung, the words quoted by South Korean newspaper the Investor, in July 2019, the company has reduced by 10% the production of single-chip platforms Exynos 9825. The Investor notes that the decision could be made due to the trade restrictions recently imposed by Japan against South Korea.

Recall, Samsung buys in Japan (for example, from Sumitomo Chemical) rare materials, in particular fluorinated polyimide and hydrogen fluoride, which are necessary for the production of chips and displays for smartphones as well as other components of modern technology.

Samsung has reduced by 10% the production of chips Exynos 9825 due to the effects of a trade war between South Korea and Japan because of the conflict between the two States, the import of these materials is difficult, and given the fact that Japan produces about 90% of fluorinated polyimides and 70% of the etching gas, the search for alternative suppliers, especially in a short time, is a difficult task.

There is an alternative

However, in addition to seeking new suppliers of materials for its own chip, Samsung can resort to the help of his longtime partner chip maker — American Qualcomm.

Samsung releases smartphones are not just for the Exynos chips, but the Snapdragon chips, the production of which engages in Qualcomm. Smart phones based on Exynos traditionally supplied the local market, but also exported to Europe, Asia and Russia.

A trade war between South Korea and Japan

In early July of 2019, the government of Japan has imposed restrictions on supply to South Korea for rare materials used in electronics manufacturing. Now to export to Korea Japanese companies need to obtain special permission for each delivery separately, and the date of its receipt up to 90 days.

Source — Bank REEF-2019, TASS

However, the government of Japan, most likely, will not impose a complete ban on the export of rare materials as it may cause serious damage to the production of chips and electronics on a global scale. Anyway, this is the opinion of Lee soo Bin (Lee Su-Bin), a Korean analyst at Daishin Securities.

A harbinger of trade sanctions by South Korea against Japan is considered to be a decision made by the South Korean court in 2018, under which the Japanese company Mitsubishi Heavy Industries and Nippon Steel & Sumitomo Metal Corp was required to pay compensation to the Korean victims of exploitation by the Japanese authorities during the Second world war.

Other problems Samsung

Samsung suffers not only from the confrontation between South Korea and Japan. At the technology giant have hurt and also a trade war between the US and China, a market the latter of which is a significant portion of the revenues of the company.

According to Bloomberg, the direct effects of trade wars for Samsung include a decline in demand for smartphones and the slowdown in the construction of data centers, which led to a decline in prices in the memory market.

According to information from the website, the company is also experiencing difficulties with sales of OLED screens for smartphones, due to poor demand for the iPhone X, where these screens are used.

Samsung is the largest manufacturer of OLED displays, which are used including the iPhone. In 2018 in this segment, the company experienced a decline, due to the fact that the demand for iPhone X were less than expected. In the second quarter Samsung asked Apple to compensate for the fact that the real supply of displays for the iPhone were below the contractual assessments.

At the end of II quarter of 2019. Samsung’s operating profit fell by 56% compared to the same period in 2018 and amounted to $5.6 billion

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