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President Moon Jae-in speaks with company CEOs of electric vehicle, semiconductor and shipbuilding industries during their meeting at Cheong Wa Dae, Thursday. Yonhap |
By Nam Hyun-woo
President Moon Jae-in is striving to guide Korean chipmakers that have been forced to play a balancing act in the escalating standoff between the U.S. and China.
Experts said Korea's semiconductor industry should be viewed as a matter of national security, requiring a diplomatic approach to accompany the strategies of private businesses. Such an approach, according to experts, would ensure that the industry retains its edge amid attempts by the U.S. and China to include Korean chipmakers in their supply chains.
President Moon presided over an economic ministers' meeting, Thursday, to discuss strategies for Korea's electric vehicle, semiconductor and shipbuilding industries. The CEOs of Samsung Electronics, SK hynix and other major companies in those industries also attended the meeting.
"The semiconductor industry is undergoing the most noticeable change in the global supply chain," Moon said. "The semiconductor industry is of strategic importance and the country's current and future economic status hinges on it. We should continue leading the global supply chain, and the government will come up with multidimensional support plans for companies to ensure our country consolidates its No. 1 status in the world."
The meeting came amid growing calls from businesses that the government should play a bigger role in helping Korean chipmakers that are facing pressure from the U.S. and China to side with them.
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U.S. President Joe Biden holds up a silicon wafer at the virtual CEO Summit on Semiconductor and Supply Chain Resilience in the Roosevelt Room of the White House, Monday. AP-Yonhap |
During a virtual meeting with semiconductor company CEOs, Monday (U.S. Time), U.S. President Joe Biden made straightforward remarks urging companies present at the meeting, including Samsung Electronics, to invest in the U.S.
"Chips, like the one I have here ― these chips, these wafers, are batteries, broadband; it's all infrastructure," Biden said while holding up a silicon wafer. "We need to build the infrastructure of today, not repair the one of yesterday. … And we need the support ― all your support ― on the screen and others, in order to get this work done."
On the other hand, Huawei, one of the companies that suffered the most from U.S. sanctions, blamed Washington for a global chip shortage, Tuesday, as well as calling for cooperation with semiconductor companies in Korea and other regions to form a new supply chain.
"We hope to cooperate with advanced semiconductor countries, such as South Korea, Japan and those in Europe, to form a global supply chain again," Karl Song, Huawei's vice president of corporate communications, said during a press conference. Huawei said it is seeking to step up collaboration with Korean companies, citing past purchases from the chipmakers.
After an April 3 meeting between the foreign ministers of Korea and China, Beijing said in a statement that it wants to have a strong partnership with Korea in the fields of integrated circuits.
Such calls reverberate deeply in Korea, because China is the largest market for Korean chipmakers. According to data from the Ministry of Trade, Industry and Energy, Korea's semiconductor exports stood at $9.57 billion in March, and shipments to China, including Hong Kong, accounted for 60 percent or $5.73 billion.
"This is no longer a matter that a private company can decide alone," said Sung Tae-yoon, a professor at Yonsei University's School of Economics. "Companies already know what the answer is, and it is the government's role to decide the direction of policy and let firms do business on that track."
According to Sung, the probability is high for companies to choose the U.S. given the country's status as the top powerhouse in advanced technologies. When Korean companies lose in the U.S. market or their partners as a consequence of teaming up with Chinese firms for investment or R&D, there will not be many choices left for them to survive in the global market, he said.
"When it comes to sweatshop products or less-advanced technologies, the U.S. is not telling its allies or partners to stay away from China," Sung said. "But in terms of advanced technologies, the U.S. has a clear stance. There's no need to take a look into diplomatic matters to know the answer."
Industry officials said they generally agree that the U.S. is an undisputed leader in the semiconductor industry, but it is also difficult for Korean chipmakers to ignore calls by China for stepped up cooperation.
"Given the high reliance on the Chinese market, chipmakers are forced to make an uneasy choice," a senior industry official said. "Instead of looking into the dark side of the situation, businesses also hope that the government may use this situation as a tool to boost Korea's influence in the global supply chain."