3M Belgium Halts Coolant Production..."DRAM Price Rebound May Accelerate"

Impact on the Supply Chain of the Korean Semiconductor Industry

[Asia Economy Reporter Park Sun-mi] The Belgian authorities' strengthening of ESG (Environmental, Social, and Governance) standards has also impacted the supply chain of the Korean semiconductor industry.

According to the semiconductor industry on the 2nd, as the Belgian government recently tightened environmental standards on perfluoroalkyl substances (PFAS) emissions, the 3M plant in Belgium, which supplies coolant?a type of semiconductor cooling water?has completely halted operations. Semiconductor cooling water is mainly used in the etching process, with suppliers including 3M and the Solvay Group, and most Korean semiconductor manufacturers currently use 3M's coolant. 3M holds a 90% global market share of coolant.

Korean semiconductor companies such as Samsung Electronics and SK Hynix are currently responding by using secured inventory and are preparing measures to secure coolant from other companies to replace 3M.

However, it is widely believed that the suspension of the 3M Belgium plant will not immediately halt production lines in the Korean semiconductor industry. Kim Kyung-min, a semiconductor analyst at Hana Financial Investment, explained, "The impact of such measures on Korean semiconductor manufacturers is expected to be limited in the short term," adding, "This is because semiconductor companies secure coolant through long-term contracts of six months to one year and are making efforts to secure alternative coolant."

He added, "Another reason why the impact on Korean semiconductor manufacturers is expected to be limited in the short term is that 3M is showing efforts to resolve the issue rather than ignoring it, such as separately announcing improvement measures," and "Referring to the improvement plan announced by 3M on the 30th of last month, they are investing approximately 201.9 billion KRW to address problems arising from traditional PFAS production processes, showing efforts to resolve the issue."

However, if the coolant shortage issue prolongs, it could lead to price increases due to disruptions in semiconductor production. Analyst Kim said, "If the issue is not resolved promptly, the rebound in DRAM prices among memory semiconductors could occur earlier than expected (June to July 2022)," adding, "There have already been cases in the automotive semiconductor market where supply shortages of specific products triggered price rebounds." He further noted, "Through a series of events such as Japan's semiconductor material export regulations, the resurgence of COVID-19, China's shutdowns, and the Russia-Ukraine war, the industry's efforts to diversify supply chains will accelerate."

This content was produced with the assistance of AI translation services.