Japanese Prime Minister Fumio Kishida that visited Seoul for two days is known to have said that it would help if the “businesses take the initiative in fostering cooperation between South Korea and Japan” during a meeting on Monday with the heads of Korea’s six major business lobby groups including Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry.

Kishida’s remarks indicate a shared agreement to expand bilateral economic cooperation at a private level. It is also encouraging that he has discussed the need for the two countries to jointly respond to the recent realignment of global supply chains led by the U.S.

Reinforcing coordination and cooperation for global supply chains of semiconductors was also at the center of the summit talks on economic cooperation between the two leaders.

President Yoon Suk Yeol and his counterpart Kishida agreed on Sunday to work together to build a solid semiconductor supply chain between Korean chipmakers and Japanese materials, parts, and equipment companies.

They shared the view that Korea’s chip manufacturing capabilities and Japan’s technological edge in the materials, parts, and equipment sector, when combined, can create synergies.

The Korean government and businesses started developing the nation’s own capabilities to produce chip materials, parts, and equipment after being hit hard by Japan’s export control on core chip materials in 2019.

Korea has managed to produce some chip materials and parts in the last four years since, but the technological divide and dependency on Japan still remain. Some core materials and parts cannot be sourced outside Japan.

According to the Korea International Trade Association, 90 percent of wafer coating materials and 79 percent of photoresists are still being imported from Japan. As much as 94 percent of photoresists for extreme ultraviolet (EUV), a critical material in the semiconductor process, are produced by Japan.

This is why Korea needs to expand cooperation in the area while, at the same time, enhance capabilities for local production.

President Yoon also sees the necessity for strategic cooperation between the two countries as he said earlier in March that Korea “can create the world’s top advanced, innovative base for chips in the chip cluster to be built in Yongin, Gyeonggi Province, by attracting a large number of competitive chip materials, parts, and equipment makers from Japan.”

Economic exchanges between the two countries are expected to gain momentum once bilateral trade relations normalize after Japan completes the process to put Korea back on its whitelist.

Kishida should step up efforts to foster bilateral supply chain cooperation based on the latest bilateral summit agreements amid growing uncertainties in global supply chains.

By Editorial Team

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