The global supply chain and supplies of chips and smartphones could get disrupted because of a potential row between South Korea and Japan as Seoul threatened Tokyo with retaliation against the latter’s recent decision to put export limits on high-tech materials.

In case of the measures which were implemented on Thursday were to continue, it would affect the business and supply chains of Samsung Electronics Co and SK Hynix Inc with delays. Both the companies are the leaders in chip manufacturing in the world and are suppliers for the two of the largest smartphone makers of the world – Apple and China’s Huawei Technologies.

“Implementing corresponding measures against Japan cannot be ruled out,” Finance Minister Hong Nam-ki told South Korea radio. He said the trade row could cause “unfortunate damage to both Korean and Japanese economies”.

South Korea has been trying to get Japan to pay compensation for Japan’s use of forced wartime labor and the issue came out in the spotlight last year after a ruling in a South Korean court. This latest dispute between the two countries is the latest flashpoint in that spat between the two Asian power houses.

South Korea’s trade minister said that the global supply chain of chips and smartphones would be disrupted because of the decision of Japan to put a limit on the exports of three materials to South Korea that are critical for the production of chips and smartphone displays. Japan implemented the curb starting this Monday.

According to reports in the Japanese media, about 70 per cent to 90 per cent of the three materials in question are made in Japan and therefore a curb on the export of the three materials to South Korea would make it difficult for Seoul to get them from alternative sources.

“It will pose a huge uncertainty and threat to the global economy by shaking up the global supply chain,” Trade Minister Yoo Myung-hee told a meeting of industry groups on Thursday.

South Korea would be actively seeking a way out through diplomatic countermeasures, said the country’s presidential office on Thursday. Those measures would also include approaching the World Trade Organization for redress of what it called “retaliatory” export curbs.

“We will explain to major countries about the unfairness of Japan’s action, and the fact that this violates the principle of free trade,” Yoon Do-han, press secretary to the President, said in a statement.

It would take a long time to get a WTO ruling on the dispute, said Finance Minister Hong.

The current spat between South Korea and Japan started last year after a South Korean court last year ordered payment of hundreds of thousands of dollars to South Korean plaintiffs by Japan’s Nippon Steel & Sumitomo Metal Corp and Mitsubishi Heavy Industries Ltd.

The court verdicts were termed as “unthinkable” by Japan.

The historical relationship between the two countries has not been very rosy because of multip0le incident which includes the colonization of the Korean peninsula by Japan in 1910-45 and the use of comfort women, Japan’s euphemism for girls and women, many of them Korean, forced to work in its wartime brothels.

(Adapted from Reuters.com)

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