Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Biden's push forces Samsung into balancing act with China
U.S. President Joe Biden speaks in the Roosevelt Room of the White House during a virtual summit with global business leaders on the semiconductor shortage in Washington, D.C., Tuesday (KST). AFP-Yonhap
By Yi Whan-woo
US President pledges more investment in semiconductor infrastructure
By Yi Whan-woo
U.S. President Joe Biden's pledge to support the semiconductor industry during a virtual meeting with global business leaders, Tuesday (KST), could push Samsung Electronics to walk a tricky tightrope between the United States and China.
The U.S. leader explicitly addressed a need to stay ahead of China during the meeting with the executives from 19 companies ― Samsung Electronics being the only one from Korea.
Others included Google parent Alphabet, Intel, Dell, General Motors, AT&T, all from the U.S., and Taiwanese microchip maker TSM.
“China and the rest of the world are not waiting. There is no reason why America should wait. We are investing aggressively in areas like semiconductors and batteries,” Biden said after unexpectedly joining the meeting hosted by National Security adviser Jake Sullivan and National Economic Council Director Brian Deese.
The gathering was to address the global semiconductor shortage that has severely affected American automakers, as part of a broader focus on rebuilding U.S. manufacturing amid speculation that the Chinese economy may overtake that of the U.S. by 2028.
The world's leading semiconductor maker, Samsung Electronics, runs plants in both the U.S. and China. The conglomerate was in the final stages of deciding on details before investing more in its semiconductor manufacturing facilities in Austin, Texas.
But this could be politically interpreted as upsetting to China while causing concern with the Korean government that wants to avoid being caught in the crossfire in the Washington-Beijing feud, according to an analyst.
“A corporation usually makes a move based on business needs, but this may not be the case for Samsung Electronics,” said Shin Yul, a political science professor at Myongji University.
He noted China announced that it agreed to bolster cooperation on integrated circuits, 5G and other advanced technologies with Korea during a meeting between the foreign ministers of the two countries, April 3.
“Samsung therefore is advised to take into account the geopolitical situation regarding its chip business expansion in the U.S. to avoid any misunderstanding,” Shin added.
In a report released Tuesday, KB Securities assessed that the White House meeting may “induce” Samsung Electronics to “shift back” its investment in the foundry sector in the U.S., estimated to be worth 19 trillion won ($16 billion).
Samsung has been operating a massive semiconductor plant in Austin since 1997.
“The U.S. government is expected to offer tax incentives and other benefits to get Samsung Electronics' foundry investment,” it said, adding the firm may build an extra plant in addition to the existing one.
But what make the case worse for Samsung Electronics is the absence of its chief, Vice Chairman Lee Jae-yong, who is serving a jail term over corruption. Choi Si-young, Samsung's foundry business chief, attended the White House meeting on Lee's behalf.
Against this backdrop, Samsung Electronics said “nothing has been confirmed” in relation to Biden's message.
Cheong Wa Dae acknowledges the possible seriousness of the hidden implications of the U.S. president's message, with President Moon Jae-in's chief of staff You Young-min meeting with Samsung executives, Friday, in what was seen as bid to enhance communication between the semiconductor business and the government, presidential spokesman Kang Min-seok told reporters in a briefing at the presidential office.
He added that Moon will hold a meeting with economy-related ministers, Thursday, to discuss the situations faced by key industries, such as chips, electric vehicles and shipbuilding, as well as countermeasures.
The participants will be joined by business executives, including Samsung Electronics President Lee Jung-bae and others from SK Hynix, Hyundai Motor, Samsung Heavy Industries among others, Kang said during the briefing.