South Korea, Japan dispute could hurt the global tech sector if it drags on: Sovereign wealth chief



Saheli Roy Choudhury | CNBC

Growing trade tensions between South Korea and Japan may look like a local dispute — but if they drag on, they could disrupt the high-end tech industries on a global scale, says the chief executive officer of South Korea’s sovereign wealth fund.

South Korea downgraded trade relations with Japan on Wednesday and dropped Tokyo from its list of preferred partners that receive fast-track approvals. The move was said to be in retaliation against Tokyo’s decision last month to remove Seoul from its own preferential list of trusted trade partners.

If the trade conflict between the two neighboring countries continues in the long run, it could have a big impact “because it might disrupt (the) global value chain — especially in high technology sector,” Heenam Choi, chairman and CEO at the Korea Investment Corporation, told CNBC’s Amanda Drury at the Singapore Summit. “We are … really worried about that kind of trade tension.”

Some of these high tech products that both countries buy from each other include electronic equipment, parts like integrated circuits and various materials used to produce computers, smartphones and cars. Global production for these high-value products could be disrupted if their trade fight continues.

Tensions between the longtime rivals intensified in July when Japan announced stricter restrictions on exports of three crucial high-tech materials used by South Korean tech companies, like Samsung, to make memory chips and smartphone displays. Seoul, for its part, has launched a complaint to the World Trade Organization.


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