A price warning has been issued for hydrofluoric acid, a key material for semiconductor manufacturing, with a significant hike expected this summer.
At the heart of this issue is the soaring cost of anhydrous hydrofluoric acid (AHF), the raw material used to make the final product. AHF prices have jumped about 40% since the start of the year, and this isn't due to a single cause, but a complex mix of global events.
First, we have to look at the Middle East. The ongoing conflict has led to a blockade of the Strait of Hormuz, a critical shipping lane. This disrupts the flow of crude oil, and with it, the supply of sulfur, which is a byproduct of oil refining. Since sulfur is the primary ingredient for making sulfuric acid, its scarcity directly pushes up sulfuric acid prices worldwide.
Second, and more directly impacting Korea, is a policy change from China. In April, China announced it would halt exports of sulfuric acid to prioritize its domestic supply. This is a major blow because Korea heavily relies on China for AHF, importing nearly 80% of its supply. With its main source of a key ingredient suddenly restricted, the cost pressure intensified almost overnight.
On top of these supply shocks, other factors are fanning the flames. The Korean won has weakened against the U.S. dollar, making all imported materials more expensive. At the same time, the semiconductor industry is in an upswing, with massive investments in advanced chips like HBM. This strong demand means chipmakers are more likely to accept higher chemical prices to avoid disrupting their production schedules.
For Korean chip giants like Samsung and SK Hynix, this means facing higher costs for an essential material that's difficult to replace. While they may have inventory to buffer the immediate impact, they will likely have to accept new, higher prices from suppliers starting in June or July. This situation highlights just how vulnerable the high-tech supply chain is to distant geopolitical conflicts and policy shifts.
- Hydrofluoric Acid (HF): A highly corrosive acid used in semiconductor manufacturing to etch silicon wafers and clean surfaces. It's an indispensable chemical in the chip-making process.
- Anhydrous Hydrofluoric Acid (AHF): The raw, water-free form of hydrofluoric acid. It is produced from fluorspar and sulfuric acid and is the precursor to the high-purity HF used in the electronics industry.
- Strait of Hormuz: A narrow waterway connecting the Persian Gulf to the open ocean. It is one of the world's most important strategic chokepoints for oil and gas shipments.