Author: Ada, Deep Tide TechFlow

China's chain reaction from its tungsten pipe restrictions has reached the upstream of AI storage chips.

Japan's 25% share of global WF6 (Tungsten Hexafluoride) production capacity is on the countdown to shutdown, forcing Samsung and SK Hynix to overnight look for alternative supplies. SK Specialty has signed a monthly supply contract for 150 tons with Samsung, and Foosung has started certification with China Shipbuilding Group's CSSC Specialty Gases, aiming for large-scale imports starting in August; the WF6 contract price for 2026 has already been locked in with an increase of 70 to 90%, as Japanese suppliers warn that critical stock may be depleted by mid-2026. On social media platform X, "White Haired Stock God" Serenity has named Foosung as the "big winner," but the inherent risks of the positioning game are equally clear; South Korean manufacturers also rely on imports for the tungsten powder needed to produce gas.

Japan's two main WF6 suppliers, Kanto Denka Kogyo and Central Glass, have informed South Korean clients including Samsung, SK Hynix, and DB HiTek that they cannot guarantee supply after May and June. This is a heavy blow to the downstream storage chip industry following China's export restrictions on tungsten-related items initiated in February 2025.

China's APT export restrictions lead to pressure on Japanese WF6 production capacity

As early as February 2025, China's Ministry of Commerce and the General Administration of Customs jointly announced that tungsten-related items would formally be included in the dual-use export control list. The impact of this layout has become clear more than a year later. According to industry analysis firm CTOL Digital, since the implementation of the restriction, Japan's imports of APT (Ammonium Paratungstate, a precursor of tungsten powder) from China have plummeted by as much as 70% along key trade routes, which directly chokes the throat of Japanese WF6 manufacturers.

The speed of pressure is faster than expected in the industry. The South Korean semiconductor media The Elec reported on April 3, citing multiple industry insiders, that Kanto Denka and Central Glass have begun notifying South Korean chip clients, including Samsung and DB HiTek, of a potential imminent supply disruption. An insider indicated, "In May and June, existing tungsten inventories can maintain supply, but the outlook for the second half of the year is unclear." Japanese manufacturers have suggested South Korean clients turn to local alternative suppliers SK Specialty and Foosung.

Japan accounts for about 25% of global WF6 supply. This means that once Japanese manufacturers reduce production, a quarter of the global tungsten film materials will disappear instantly. According to information agency SunSirs, about 80% of Samsung and SK Hynix's past WF6 procurement came from Japan, putting them at the forefront of the storm. Among them, Samsung's exposure is significantly higher than that of SK Hynix because the latter has a more diversified supply mix, including SK Specialty and Foosung, as well as China's Peric Special Gases.

SK Specialty signs a long-term monthly supply contract for 150 tons with Samsung, leading South Korean manufacturers to urgently expand production

In the face of crisis, South Korean manufacturers have shown extraordinary execution speed. According to SunSirs, SK Specialty has signed a long-term supply agreement for 150 tons per month with Samsung. This scale is unusual under normal circumstances because WF6 is a high-purity specialty gas, rather than a bulk commodity that can be arbitrarily increased.

SK Specialty is the largest WF6 supplier in South Korea and has a natural group synergy with downstream clients. It belongs to the SK Group and has a close relationship with SK Hynix, which is also part of SK Group; this time it has included Samsung on the long contract list, effectively occupying positions between the two major storage manufacturers in South Korea.

Time is the scarcest resource in this order-snatching game. WF6 is a highly corrosive and hazardous gas with a purity requirement of 5N to 6N, and the certification process for new suppliers typically takes 12 to 18 months, covering multiple stages such as process testing, yield validation, and equipment adaptation. However, according to The Elec, some foundries are "shortening or skipping parts of the process" for one reason only: urgency.

Foosung initiates certification with CSSC Specialty Gases, aiming for large-scale imports starting in August

Foosung (Korean code 093370) is taking a different path. This South Korean fluorochemical manufacturer, valued at approximately $1.2 billion, is one of the three existing WF6 suppliers for SK Hynix, with the other two being SK Specialty and China's Peric. In addition to WF6, it is also South Korea's only producer of anhydrous hydrogen fluoride (HF), the second-largest WF6 manufacturer in South Korea, and the only producer of battery electrolyte salt LiPF6; its Ulsan plant integrates three fluorochemical production lines with a highly concentrated technological asset.

According to industry information cited by various media such as SunSirs and futunn, Foosung has initiated the certification process with China Shipbuilding Group's CSSC Specialty Gases, aiming to begin large-scale imports of WF6 starting in August. The hidden meaning of this action is worth unpacking: Japan is ceasing production of WF6 due to a shortage of tungsten powder, while South Korea's Foosung is turning to import WF6 finished products from China; the same tungsten supply chain has been sliced by China's export control into "cutting off Japan" and "supplying South Korea."

Serenity, the "White Haired Stock God" on platform X, has noticed this line. He posted on June 13, naming Foosung: “Foosung seems poised to become a major beneficiary soon. Essentially, China's export restrictions on Japan lead to the collapse of the Japanese WF6 supply chain, while the global 25% supply needed by SK Hynix, Samsung, and TSMC has to find alternatives.”

The secondary market has already shown a response to this logic. According to CTOL Digital, Foosung's stock price has increased by about 196% over the past 12 months, despite its TTM EPS still being negative.

The WF6 contract price for 2026 has increased by 70 to 90%, and Japanese manufacturers warn of stock depletion

Price signals on the contract level have already been sent out. According to CTOL Digital, SK Specialty, Foosung, and Japan's Kanto Denka have formally notified Samsung, SK Hynix, DB HiTek, and Magnachip that the contract price for WF6 in 2026 will be increased by 70% to 90%. This is a collective pricing behavior under an oligarchic structure, with downstream buyers having few alternative options.

More alarming is another signal from the supply side. Again according to CTOL Digital, Japanese suppliers have warned that critical inventories may be depleted by mid-2026. This means that even South Korean clients who have signed long-term contracts are facing uncertainty regarding the arrival of physical goods.

The irreplaceability of WF6 is being re-evaluated by the market. Chip manufacturers cannot randomly switch cylinders among different suppliers; any deviation in impurities may lead to hundreds of millions of dollars in wafer inventories being scrapped. This is also the fundamental reason why new suppliers require rigorous certification that takes 12 to 18 months and is the underlying logic of the establishment of oligopolies.

Responses at the stock price level have already taken the lead. According to CTOL Digital, Japanese Kanto Denka's stock price has increased by about 374% in the past year, and its market value has soared to 240.3 billion yen, with a TTM price-to-earnings ratio exceeding 63 times. Foosung has seen an increase of about 196% during the same period, and although its TTM EPS remains negative, the market still grants it a significant premium. These price reflect not a short-term spike driven by events but a structural re-evaluation by the market regarding the oligopolistic landscape of WF6.

The positioning window for South Korea is supported by geopolitical factors, not determined by technological barriers

South Korean manufacturers benefiting from Japan's supply disruption are not completely independent themselves. SK Specialty and Foosung, as domestic WF6 producers, also rely on imports for the tungsten powder needed for gas production, but so far, they have been treated differently from their Japanese counterparts. SunSirs has stated: “China's export restrictions have primarily targeted Japan to date, while South Korea can still continue to import tungsten powder, which is a geopolitical choice, not a natural manifestation of market laws.”

The domestic selling side in China is rising rapidly. According to futunn, industry data indicates that CSSC Specialty Gases will reach a WF6 production capacity of 2,000 tons per year by the end of 2025, with a purity reaching 6N level, and the products have entered the global chip supply chain. SunSirs further indicates that the localization rate of fluorinated specialty gases in China has significantly increased to 50% over the past two years.

This reality clearly adds a note to the "winner" story of Foosung. The current window period is based on the premise that "China continues to allow the import of tungsten powder to South Korea," rather than being locked in by irreplaceable technological barriers. Decision-makers at Samsung and SK Hynix may already be asking themselves the question raised by SunSirs: "If Japan can be shut down due to a material shortage, what can prevent South Korea from facing the same fate tomorrow?"