Japan, South Korea Dispute Could Impact Supply Chains

Alarms are going off in the tech sector as two major global tech producers argue over a bureaucratic process driven by politics.

Silicon Valley tech giants fear the clash between Japan and South Korea could have lasting repercussions, The Wall Street Journal reports.

The trade feud between two of Asia’s largest economies focuses on whether Japan should kick South Korea off the “white list” of credible export havens. The list is intended to thwart the spread of weapons.

The spat centers on whether Japan had made adequate restitution to Koreans who suffered under Japan’s 1910-45 occupation. The argument further heightened when Japan started curtailing semiconductor exports to South Korea, the article said.

U.S. technology giants are encouraging the two countries to arrive at a resolution so the global supply chain doesn’t suffer. Even a few weeks of South Korean production slowdowns could hurt the inventory of digital products that rely on fast delivery of components, chemicals and materials.

“Non-transparent and unilateral changes in export control policies can cause supply chain disruptions, delays in shipments and ultimately long-term harm to the companies that operate within and beyond your borders and the workers they employ,” a letter from the U.S. trade groups said.

Global supply chains are increasingly coming up against nationalism, revealing how tech’s manufacturing interdependence has created vulnerabilities in the delivery of smartphones, computers and other electronics. Globalization has consolidated industries and created niche roles for some countries.

The strain between Japan and South Korea comes on the heels of trade tensions between the U.S. and China. Possible new trade disputes are also emerging between the U.S. and Europe, with analysts warning of a long-lasting impact on the world’s supply chain routes.