Japan-South-Korea Trade War Could Give Apple An Edge Over Samsung

Japan’s decision to restrict exports of three chemicals used in the production of semiconductors and display screens to South Korea could affect Samsung’s product launch; and give Apple an edge over its Korean competitor.

That’s according to Rolando Hernandez, vice president of Valid, a mobile solutions provider.

 “The edge that Apple could have over Samsung due to the conflict between South Korea and Japan is mainly from the supply chain perspective,” says Hernandez.

Trade tensions between Japan and South Korea are nothing new. They come and go, following the popular sentiment in the two countries, which is fueled by a century old feud between Seoul and Tokyo.

Japan occupied the Korean Peninsula between 1910 and 1945, leaving behind wounds that haunt relations between the two countries lasting to this day. Like the forced labor wound, which flared in recent tension, with South Korean President Moon Jae-in’s administration accusing Tokyo of retaliating against court orders telling Japanese companies to compensate those who were forced to work during Japan’s occupation of the Korean Peninsula.

That’s a matter Japan insists was settled back in 1965, when Tokyo provided Seoul with US $800 million in economic aid and loans.

Meanwhile, the flaring of trade tensions has winners and losers. The losers will be Korea’s smartphone makers —  like Samsung — and smartphone consumers, who will end up paying higher prices for smartphones.

The winners could Chinese smartphone makers and Samsung’s American competitor, Apple.

To be fair, Apple is both a competitor and a client of Samsung. It’s a competitor in the end market, but a client in the intermediate (component) market. Japan’s export restrictions on the three key chemicals, therefore, will affect Apple, too. “Samsung and LG, both in South Korea, are the leaders and main suppliers for Apple of OLED displays and iPhones, as well as DRAM and NAND flash memory chips,” explains Hernandez.

Nonetheless, the effect will be much smaller than that experienced by Samsung, as Apple has already made alternative plans. According to Hernandez, Apple has been in conversations with the Chinese company BOE Technology Group since last year about them becoming their third provider of this technology, regardless of the current commercial conflict between the US and China. “However, due to the current conflict between Japan and South Korea, it looks like Apple already has another supplier that can fulfill its expectations,” he says,

Meanwhile, the US-China trade disputes will make it difficult for Samsung to find alternative suppliers in China, Hernandez concludes. “It could be tougher for Samsung to find another supplier for their own devices. BOE is its direct competitor and even at the end of last year, Samsung indicted a group of employees at one of Samsung’s vendors for leaking OLED edge panel technology to China.”

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