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A strike in South Korea has halted supply of a critical cleaning chemical used in semiconductor manufacturing

Image: Reuters Berita 24 English - According to the Korean International Trade Association (KITA) , a week-long strike by truck drivers in ...

Image: Reuters

Berita 24 English - According to the Korean International Trade Association (KITA), a week-long strike by truck drivers in South Korea has hampered shipments to China of a vital cleaning substance required by semiconductor chip manufacturers.
It was the first indication that the strike was hurting the global semiconductor supply chain, with the South Korean sector already losing more than $1.2 billion in lost output and unfilled deliveries.

According to KITA, a Korean company that makes isopropyl alcohol (IPA), a chemical used in chip wafer cleaning, is having trouble shipping to a Chinese company that supplies wafers to chipmakers.

The trade association stated in a statement that some 90 tonnes of the material, or a week's worth of shipments, have been delayed.

It emphasised that the Chinese firm does not supply wafers to Samsung Electronics Co Ltd's chip manufacturing operations in China, correcting an earlier allegation that production had been disrupted.

IPA shipments from a major South Korean petrochemical company's factory in the port city of Yeosu are also being hampered by the strike.

Only a "necessary amount" is being allowed in, according to a source familiar with the situation, who requested anonymity and declined to name the company due to the delicacy of the situation.

According to the company's website, its IPA is used as an industrial cleaning agent in semiconductors and liquid crystal displays (LCD), among other things.

After four rounds of talks with the government failed to reach a settlement, the truckers' union, which is protesting rising gasoline prices and seeking minimum wage guarantees, pledged to prolong the strike.

It also chastised the transport ministry for being "neither willing to negotiate nor capable of addressing the current situation," according to a statement released on Tuesday.

Analysts believe the strike's impact on local chipmakers will be limited, citing the fact that both Samsung and SK Hynix, the world's second largest memory chip maker, keep three months or more of inventories on hand for ingredients.

"Both have dramatically raised inventory," said Ahn Ki-hyun, senior executive director of the Korea Semiconductor Industry Association, "since Japan's export limitations on chip material in 2019 highlighted the issue."

Because the truckers began their strike less than two months after social distancing standards were loosened, small business owners expressed concern about the damage a long strike could cause in the recovery from the COVID-19 pandemic.

"Small company owners are waiting hopelessly," a dozen small business lobbying organisations said in a statement, adding that shipments of wine, food, agricultural, and fisheries items have been halted.

The strike, according to an executive at HiteJinro Co Ltd, the largest brewer of soju, the South Korean liquor, reduced exports by around 40%.

Large companies were sending their own trucks to ensure availability, but small businesses, such as convenience stores, were running out of goods, according to the official.

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