South Korea Semiconductor Industry Hit by Hydrofluoric Acid Price Surge Linked to Hormuz Disruption

South Korea's semiconductor industry is facing a serious raw material crisis triggered by the closure of the Strait of Hormuz. The disruption has set off a chain reaction that is now pushing up the cost of electronic-grade hydrofluoric acid (HF), one of the most critical chemicals used in chip manufacturing.

Hydrofluoric acid is essential in semiconductor fabrication, where it is used to etch wafer surfaces and remove oxide layers and metallic contaminants. Its purity level directly affects chip yield rates. The chemical is produced by reacting fluorite with sulfuric acid, which itself depends on sulfur - a byproduct of crude oil and natural gas refining. The Hormuz closure has disrupted roughly 30% of global sulfur supply, which has driven sulfuric acid prices sharply higher. Sulfuric acid now represents more than 50% of anhydrous hydrogen fluoride (AHF) production costs, up from approximately 30% before the crisis began.

South Korean producers of semiconductor-grade hydrofluoric acid, including Soulbrain, ENF Technology, and Foosung, rely on AHF imported from China as their primary input material. Since February 2026, Chinese AHF prices have increased by up to 130% compared to early-2026 levels, partly because sulfuric acid is also a critical input for fertilizers, steelmaking, and battery cathode materials, prompting China to restrict its own exports of the material.

As of May 2026, South Korean chemical suppliers have been absorbing most of these cost increases but have begun notifying downstream customers of upcoming price revisions. Samsung Electronics and SK Hynix, which together account for the overwhelming majority of domestic HF consumption, are expected to face higher material costs starting in late June or July 2026. This comes at a difficult time, as both companies are already navigating price pressure on DRAM, NAND flash, and High Bandwidth Memory (HBM) products driven by surging AI-related demand.

The current situation echoes the 2019 crisis, when Japan imposed export restrictions on high-purity hydrofluoric acid and other chemicals essential to South Korean chipmakers. That episode accelerated domestic investment in chemical self-sufficiency. However, the new pressure point shows that dependency has simply shifted from Japan to China and to global sulfur markets.

A domestic production alternative is under development. BGF EcoMaterials, through its subsidiary Fluorine Korea, is investing approximately 150 billion Korean won in a hydrofluoric acid plant in Ulsan. The facility targets an annual production capacity of 50,000 tons, roughly half of South Korea's current domestic demand, with mass production expected to begin in the fourth quarter of 2026. This project will reduce exposure to Chinese AHF imports over the medium term, but will not prevent the price increases that chipmakers are set to absorb in the near term.

The semiconductor cluster centered around Hwaseong, in Gyeonggi Province, concentrates the largest Samsung Electronics fabrication facilities in the country and is the primary consumer of electronic-grade HF. Any sustained increase in chemical input costs will add pressure to wafer production margins at a time when global memory markets are already under strain from the broader Hormuz-related energy shock.