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

The friction, stemming from the issue of South Koreans forced to work for Japanese firms during World War Two, 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 (005930.KS) and SK Hynix (000660.KS), which supply chips to the likes of Apple (AAPL.O) 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 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 neighbors plan to hold talks on Friday, he added.

Source: TREND News Agency