Samsung Secures Emergency Supply of Key Materials From Japan

(Bloomberg) -- Samsung Electronics Co. has secured emergency supplies of three key materials that Japan had cut off as part of its export restrictions, averting a crisis at the South Korean company’s production lines.

Samsung Vice Chairman Jay Y. Lee shared the “outcome” of his Japan trip with the company’s management during a directors’ meeting he hosted on Saturday, Yonhap reported, citing unidentified people familiar with the financial situation. While it is unknown how Lee secured the additional inventory, or how big the emergency stock is, his procurement will help prevent a “grave manufacturing deadlock,” Yonhap said.

A Samsung Electronics representative was not immediately available to comment.

Lee visited Tokyo last week to try to find alternative sources for semiconductors in response to Japan’s export curbs against South Korea, the Korea Times reported. He planned meetings with Japan’s major banks and chipmakers during his trip, according to TV Asahi. The Japanese action has evolved from a historic dispute between the two countries to one affecting some business sectors.

Source Alternatives

While inventory levels differ across each material, Samsung has less than a month’s worth of supply on average, people familiar with the matter told Bloomberg last week. While trying to source alternatives, the company is bracing for potential production cuts, or even stoppages, should the situation persist, the people said.

In the meeting with directors, Lee also ordered the company’s management to prepare a contingency plan in case the spat between Japan and South Korea leads to further trade restrictions, Yonhap cited another unidentified person as saying.

Japan’s ruling Liberal Democratic Party senior member Koichi Hagiuda said on Sunday the “inappropriate incidents” that triggered Japan’s crackdown on certain exports to South Korea must have been serious. The inappropriate incidents included cases affecting Japan’s national security, Tetsuo Saito, a senior member of the Komeito Party in the ruling coalition party, said during the same debate.

To contact the reporter on this story: Hooyeon Kim in Seoul at hkim592@bloomberg.net

To contact the editors responsible for this story: Shamim Adam at sadam2@bloomberg.net, Stanley James

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