Under the Russian-Ukrainian war, the supply of chips that have been disrupted by the epidemic has once again become the focus of attention. Several sources said that the United States sought to build a chip supply chain with South Korea, Japan, Taiwan, etc. to reduce its dependence on China, but the South Korean government reportedly said that it could not fully accept it at present.
A South Korean economic expert familiar with the situation in the industry told VOA that the media reports were exaggerated, and South Korea did not make a statement of refusal, and the two sides are still in constant communication. It's just that the role of business is equally important on this issue, so it's not appropriate for the government to make a decision too quickly.
Media: The United States proposes to establish a chip alliance to reduce dependence on China. The Korean government said it could not fully accept
the Nikkei Asia report earlier this month that the United States and Japan would invite ASEAN countries to participate in a new supply chain framework aimed at preventing shortages of strategic materials such as chips. Reduce economic dependence on China, and the United States is also expected to encourage South Korea to join. Last fall, the United States had already contacted Japan and South Korea on the establishment of a semiconductor supply working group. At that time, there was a suggestion that Taiwan should also be invited to participate.
In addition, South Korea's "Seoul Economy" quoted industry and government sources as an exclusive report at the end of last month that the Biden administration recently proposed to the South Korean government and major semiconductor companies to establish a "Chip4" chip supply chain alliance, and Japan and Taiwan also received the same proposal.
According to the analysis of the report, this proposal contains the intention of establishing "semiconductor barriers" and excluding China from the global supply chain, but it is expected that the South Korean government and enterprises will be difficult to accept.
The Korean financial website "Business Korea" also reported that the current tone of the South Korean government is unacceptable.
Voice of America called the Korean Ministry of Trade, Industry and Energy to verify the above information, and the other party said that due to the agreement between the two countries, it could not be confirmed.
Chips are one of four key areas of focus in the Biden administration's supply chain restructuring plan. Internally, the United States has vigorously promoted the return of chip manufacturing. At the end of last month, the Senate passed a bill to provide $52 billion in subsidies for its own chip manufacturing.
From an external point of view, Japan, South Korea, and Taiwan, the US partners in Asia, are all important semiconductor industry bases, leading in the fields of materials, components and equipment, memory chips, and foundry respectively. If the three parties establish a chip alliance with the United States, which has the source technology of chip manufacturing, it will not only establish a stable and reliable external supply chain covering almost the entire industry, but also form a containment for China, which is developing the semiconductor industry with a national system.
According to a report by the American Semiconductor Industry Association earlier this year, China's chip sales will account for 9% of the global market in 2020, ranking fifth, surpassing Taiwan, and the gap with Japan and the European Union has also narrowed to 1 percentage point. Under certain conditions, China's share will reach 17.4% in 2024, second only to the United States and South Korea.
Korean scholar: The Korean government has not completely rejected the US proposal that South Korea and the United States have a consensus on chip cooperation.
Korean economic experts familiar with the industry situation told VOA that the media reports are slightly exaggerated, and South Korea has not completely rejected the chip alliance's proposal.
Xu Changpei, a professor of the Department of Chinese Studies at Pukyong National University in South Korea and a researcher on South Korea-China trade and economics, told VOA in a telephone interview, "South Korea has not indicated what position it will take. On March 31, South Korea and the United States also held a semiconductor meeting. The partnership dialogue has reached a consensus on jointly building a reliable value chain, and the two sides continue to communicate with each other on cooperation. I think the reports of the Korean media are a little exaggerated.”
Xu Changpei also pointed out that South Korea is not involved in the semiconductor supply chain. Completely dependent on China, Samsung Electronics spent huge sums of money to build a second factory in Texas; it also rejected the Chinese government's proposal for technical cooperation. Therefore, "the role played by South Korean semiconductor companies should be viewed from a market perspective rather than the United States or China."
In fact, for the Korean semiconductor industry, China and the United States represent the present and the future, respectively, of equal importance.
China is currently an important production base and export target country for the Korean semiconductor industry.
South Korean chip giants Samsung Electronics and SK Hynix both have factories in China. Samsung Electronics' Xi'an factory, which was expanded at the end of last month, is the company's only overseas memory chip production base, accounting for 40% of the company's NAND flash memory output and 10% of its global output. SK hynix's Wuxi plant accounts for about 50% of the company's DRAM memory production and 15% of global production.
In addition, according to data from the Ministry of Industry, Trade and Energy of Korea, in the past three years, South Korea's annual exports of chips to China accounted for about 40% of its total exports. If exports to Hong Kong are included, this proportion is as high as about 60%. . A considerable portion of the chips exported to Hong Kong flow into China.
The United States is the future production base and market for South Korea to focus on. Samsung Electronics' Texas chip foundry will produce next-generation chips for high-end industries such as artificial intelligence, future cars, and 5G after the completion of its foundry; SK Hynix has formulated the "Inside America" strategy and established a new Americas business unit , and established a research and development center in the western United States.
However, with the recent deterioration of China's business environment, geopolitical risks and other factors, the business focus of South Korean companies may gradually shift to the United States in the future.
Hong Qiyong, a professor at the Business School of Incheon National University in South Korea, pointed out to VOA during the call that the most important thing for companies, whether it is the United States or China, is the business environment. However, "Samsung and others seem to recognize that China's business environment is becoming rigid, and that the US semiconductor policy is in line with Samsung's development direction, so they are shifting the focus of their business to the United States."
However, Hong Qiyong also said that although companies "need to take a more cautious attitude in expanding their business in China", China is still a very large market, and companies such as Samsung will not withdraw their existing equipment and business.
The new government will continue to maintain its current attitude but does not rule out the possibility of a change.
Because of the business and economic interests involved, experts expect the new South Korean government to maintain its current attitude on the issue of the chip alliance.
Xu Changpei said that although the South Korean and US governments play a role in this, it is also a problem for enterprises, and it is inappropriate to make decisions too quickly. "The cooperation between South Korea and the United States in the field of semiconductors is in progress, according to the plan, not better or worse than before. Of course, compared with the Moon Jae-in government, the Yin Xiyue government is more pro-US and will invest in cooperation with the United States. More attention. But it will be just a gesture, or it will really go further than the previous cooperation, it remains to be seen.”
Hong Qiyong also believes that "in the field of semiconductors, which belongs to enterprises, the government does not specifically require companies to transfer from which country to which country, so even after the establishment of the Yin Xiyue government, the semiconductor market will not undergo very drastic changes."
But that doesn't mean South Korea has no chance of accelerating the transition. In recent years, linking the economy with national security has become a consensus in South Korean political circles, and a personal letter from President-elect Yoon Seok-wyeh, which was handed over to the White House by a South Korean policy consultation delegation visiting the United States, also involves economic security.
It is particularly noteworthy that Wang Yunzhong, a member of the Transition Committee responsible for setting the tone of the new government's industrial policy, said at a seminar that as China seeks the rise of semiconductors, the confrontation between the United States and China may lead to Samsung's Xi'an factory and SK Hynix's Wuxi factory. To become China's "hostage", the best choice for South Korea is to "build a solid semiconductor alliance front with the United States, Japan and other countries to deal with it".
Lu Xinji, an assistant professor at the Institute of International Politics at Taiwan's Chung Hsing University, pointed out in a telephone interview with VOA that from the concept of security economy, it is difficult for South Korea to consider it completely from an economic perspective. above. It's just that the United States "has not clearly stated whether South Korea has been placed in a relatively dominant position in relevant decisions or positions. So it (South Korea) may be considering it, and it may initially reject this matter."
Therefore, "Of course, it cannot be ruled out that, if possible in the future, a more formal commitment to South Korea's diplomatic status, or more commitments to South Korea's national security under the concept of security economy, should not be ruled out. , he will reconsider or agree to join such a coalition," Lu Xinji said.