Amid chip shortage, businesses seek pardon for Samsung chief
US President Joe Biden holds up a silicon wafer as he participates in the virtual CEO Summit on Semiconductor and Supply Chain Resilience in the Roosevelt Room of the White House, April 12 in Washington. AP-Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
A continued mismatch in the global supply and demand of computer chips, vital components of all digital devices, has impacted manufacturing around the world. Making matters worse, the situation is not expected to end any time soon.
The global shortage of semiconductors has become a “political issue” with U.S. President Joe Biden seeking to effectively handle the political and economic headaches caused by the scarcity of the high-tech products.
The semiconductor shortage has rattled the U.S. automotive industry. Vital parts in manufacturing cars and trucks have become unavailable, forcing automakers to halt production. That will hurt Biden's economy-focused policies and Washington's initiative to maintain a lead over Beijing in the race to develop next-generation technologies.
Biden recently imposed restrictions on Chinese technology firms, including Huawei and Semiconductor Manufacturing International Corp., one of China's largest chip makers.
The U.S. president invited the top executives of major semiconductor companies, including Samsung Electronics and Intel, to an online meeting linked to the White House, where Washington urged them to invest more to expand production capacity in the United States. President Moon Jae-in also invited senior executives at Samsung, Hyundai, SK and others to Cheong Wa Dae to explore the best possible ways for the government to help them stay competitive.
Samsung Electronics is the world's top memory chipmaker with a massive presence in the U.S. While Samsung is supporting Biden's drive to invest $50 billion in America's semiconductor industry as part of his signature “CHIPS” for U.S. program, the Korean company is also facing pressure by China to invest more there. China is hoping Korea will become its technological ally.
“Samsung is feeling pressure as Washington is viewing the semiconductor shortage problem as a political issue. China wants South Korea to be a crucial partner in semiconductor-driven businesses such as big data and artificial intelligence. Given Samsung's previous hefty investments in China for memory chips and President Moon's hopes to revive the momentum of inter-Korean dialogue, Samsung is being asked to pursue a dual-track approach in investments for semiconductors,” said a senior industry executive, Sunday.
Sources said Samsung Electronics is “very close” to specifying its mega semiconductor investment plan both in the United States and South Korea. “I can cautiously say the timing of the investment will come just few days before President Moon's face-to-face meeting with Biden at the White House possibly in early May,” another industry executive said asking not to be identified.
Washington has largely ceded to China, Taiwan and Korea its position as a manufacturer of computer chips. U.S. companies are heavily reliant on a global chain of suppliers and traders that have all come under unprecedented strain during the COVID-19 pandemic. That reliance of U.S. industries on foreign companies, such as automobiles, telecommunications and defense, poses a potential threat to America's national security and its economy.
Meanwhile, Samsung is known to have generated some 40 percent of its annual chip revenue from China.
Samsung is expected to soon announce a 70 trillion won investment plan, including 20 trillion won ($17 billion) possibly being allocated to its plant in Austin, Texas, according to sources.
A visitor passes an Intel logo at the Mobile World Congress in Barcelona, Spain, Feb. 26, 2018. Reuters-Yonhap
Acknowledging the semiconductor shortage, Samsung plans to invest up to 50 trillion won in its P3 semiconductor line being built in Hwaseong south of Seoul.
The planned investment is both huge and vital and designed to help Samsung maintain its edge over rivals in chips. And business officials are asking President Moon to pardon Samsung chief Lee Jae-yong, who has been jailed on charges of bribery involving former President Park Geun-hye, to facilitate this.
A sharp increase in demand for computer devices during the pandemic has prompted companies including Samsung to respond by committing to invest billions of dollars to build new production facilities. But this is an expensive and lengthy process.
“The semiconductor industry has become a key national strategic industry. The continued semiconductor shortage is pushing Samsung to answer the following question ― who is on your side? The answer, for me, if Samsung wants to maintain the status-quo, then it needs to invest more and this is what only the group's owner can do,” another source said.
Last week, Korea Enterprises Federation Chief Sohn Kyung-shik told reporters he suggested the idea of granting a presidential pardon for Lee. The remarks came as Moon is exploring ways to prevent his approval rating from falling further in the wake of the ruling Democratic Party's loss in key mayoral by-elections that were held in the country's two largest cities.
“I've talked about the possibility of a presidential pardon for Lee during a meeting with the finance minister and heads of economic lobby groups. Regarding the suggestion, other attendees remained quite positive on the idea,” Sohn told reporters after the meeting held at the Korea Chamber of Commerce and Industry (KCCI).
It remains unclear whether the finance minister conveyed Sohn's message to Cheong Wa Dae. However, at the time of Moon's meeting with top industry executives, the president said the government will set up specified plans to maintain the country's leading status and possibly to widen “gaps” with rivals.