South Korea's president said on Wednesday Japan's export curbs on key materials used by South Korean technology firms could be prolonged, and Seoul will help companies reduce their reliance on Japanese suppliers.
Japan said last week it would tighten restrictions on exports of three materials used in smartphone displays and chips, citing a dispute with Seoul over South Koreans forced to work for Japanese firms during World War Two.
"We can't rule out the possibility that the situation would be prolonged, despite our diplomatic efforts to resolve the issue," President Moon Jae-in said at a meeting with executives from South Korea's top 30 conglomerates.
The action hit South Korea's chip industry — the backbone of Asia's fourth-biggest economy — and potentially threatens to disrupt global supplies of memory chips made by Samsung Electronics and SK Hynix.
"It is a very regrettable situation, but we have no choice but to prepare for all possibilities," said Moon, adding that the government will sharply increase spending to help Korean firms source parts, materials and equipment domestically.