An elderly South Korean man died on Friday after setting himself on fire outside the Japanese embassy in Seoul as a bitter diplomatic dispute over wartime forced labor compensation took a fatal turn.

The row has seen Tokyo restrict exports of chemicals vital to Seoul's world-leading chip and smartphone industry in an escalation of a decades-long dispute over Japanese forced labor during World War II.

The man in his 70s started a fire inside his vehicle parked in front of the embassy building and later died after being treated in hospital, authorities said, adding around 20 disposable gas canisters were also found in this car.

The late man spoke to an acquaintance on the phone while driving to the Japanese embassy from his home Friday morning and told the person that he is "setting fire" because of "his hostility against Japan", a police officer at Seoul's Jongno Police Station told AFP.

"His family members have also told us that his father-in-law was one of the victims of Japan's wartime slavery."

His suicide came as Japan's foreign minister summoned the South Korean ambassador in Tokyo over the dispute which analysts say could batter the global tech market.

Japan's Foreign Minister Taro Kono urged Seoul to "immediately take corrective measures" after South Korea's high court ordered Japanese firms that used forced labor to compensate victims. But Japan says the issue was resolved under an agreement signed after relations with South Korea were normalized.