China Uncomfortable with Korea Joining Chip 4 Alliance

The United States is urging South Korea to join its alliance in the semiconductor industry and, at the same time, China is putting pressure on South Korea against the move. The Global Times said in its July 18 editorial that South Korea’s participation in the alliance would do more harm than good.

“Last year, South Korea’s memory chip exports totaled US$69 billion and 48 percent of the exports went to China, and this is why the South Korean government is hesitating to give a definite answer to the U.S. government,” it said, adding, “Once China, the biggest market in the industry, begins to lose trust in the South Korean supply chain in the industry, South Korean semiconductor suppliers’ Chinese market share will take an immediate hit.”

As pointed out in the editorial, South Korea cannot be as active as Taiwan and Japan in the alliance. Last year, South Korea’s semiconductor exports added up to US$128 billion, those to China accounted for 39 percent of the total, and those to China and Hong Kong accounted for 60 percent. Both Samsung Electronics and SK Hynix are currently producing memory chips in China.

Although the South Korean government is yet to give a reply, it is likely to become a member of the alliance in the end. This is because U.S. clients in the IT sector are also highly important on the part of Samsung Electronics and SK Hynix and the United States is the very leader when it comes to source technology, equipment, etc. In addition, the United States is blocking the export to China of equipment incorporating U.S. semiconductor technology.




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