Samsung is having to navigate a bitter trade spat between Japan and South Korea. It imports some key materials from Japan and with strict export curbs looming, Samsung’s business faces an immense challenge. Samsung’s top man recently took an extended trip to Japan as executives try to find a way forward.

The company sources materials that are crucial for display and semiconductor production. These activities contribute to the bulk of Samsung’s profits so it’s understandably worried. The company is said to be urging its partners in South Korea to stockpile Japanese parts as export curbs begin to bite.

No end in sight for bitter trade dispute

Samsung has reportedly sent letters to its local production partners for consumer electronics, TVs and smartphones. It calls on them to secure various Japanese components by the end of this month or August 15 at best. Japan has already applied stricter export rules on three key materials for chips and displays. It’s now likely to remove South Korea from a list of trusted buyers which would impact the supply of other important materials as well. A decision on the white list is expected to come on July 24.

The company is also working with suppliers in China, Taiwan and its home country to source materials for chip and display production. Samsung is already feeling the pinch because of export curbs on materials for chips and displays. It could be in real trouble if Japan’s additional export regulations impact consumer electronics, TVs and smartphones as well.

“If South Korea is excluded from the white list, it is likely that Japanese companies will be required to seek approval for all materials bound for South Korea,” Samsung said in the letters. So it’s trying to prevent the possibility of production being disrupted by calling on local partners to stockpile Japanese components.

Samsung promises that it will pay them for securing the materials and also reimburse the companies for any supplies that remain unused after the proposed deadline.

Update: According to Business Korea citing an unnamed SKC official, Samsung Display is in talks with the South Korean chemicals manufacturing company for the acquisition of colorless polyimide (CPI). The material is used primarily for the manufacturing of foldable OLED displays. “We have opened everything about CPI mass production to Samsung Display,” according to the SKC representative. “We are not yet in a product test stage, but we expect Samsung to reach a deal with SKC as Japan’s regulations could be further strengthened.” Business Korea reports that Samsung Display has enough CPI inventory to last for two-to-three months, which could mean that the Galaxy Fold is not yet under threat from Japan’s export restrictions. Nevertheless, Samsung Display is now looking for alternative suppliers. SKC is reportedly scheduled to start volume production of CPI in October.