Japan and South Korea ratcheted up tension on Tuesday in a diplomatic dispute that threatens to disrupt the global supply of smartphones and chips, with Seoul denouncing Japanese media reports that it transferred a key chemical to North Korea.

The friction, stemming from the issue of South Koreans forced to work for Japanese firms during World War II, worsened last week when Tokyo said it would tighten curbs on exports of three materials crucial for advanced consumer electronics.

The move could hit tech giants, such as Samsung Electronics and SK Hynix, which supply chips to the likes of Apple and Huawei, and underscores Japan’s sway over a vital link of the global supply chain.

In some of the sharpest comments yet, South Korean Industry Minister Sung Yun-mo urged Japan to “stop making groundless claims immediately”, an apparent response to a Japanese media report last week. The report quoted an unidentified senior member of Prime Minister Shinzo Abe’s ruling Liberal Democratic Party (LDP) as saying that some hydrogen fluoride exported from Japan to South Korea had ultimately been shipped to North Korea. Hydrogen fluoride, a chemical covered by Tokyo’s recent export curbs, can be used in chemical weapons.

Japan has said it has seen “inappropriate instances” of South Korea’s export controls, but has not elaborated. Asked about countermeasures, Sung said Seoul was reviewing “every possible plan”, but gave no details. The neighbours plan to hold talks on Friday, he added.

Further measures

Earlier, Japan had once again floated the possibility of further measures against South Korea. “Whether Japan implements additional measures depends on South Korea’s response,” Industry Minister Hiroshige Seko told a news conference. Tokyo was “not thinking at all” of withdrawing the curbs, which did not violate WTO rules, he added.

South Korea appears to be pressing both the WTO and Washington on the issue, however. The export curb figured on the agenda of a Tuesday meeting of WTO member nations, where Seoul is set to explain its position, a South Korean foreign ministry spokesman said.

A South Korean Foreign Ministry official was also expected to discuss the curbs with his counterpart in Washington.

South Korean President Moon Jae-in called for the restrictions to be withdrawn, adding that Seoul could not rule out countermeasures for damage inflicted on its firms.