Who Will Protect Korean Chipmakers in U.S.-China Wars?

      May 19, 2020 13:33

      The U.S. government has announced tough restrictions on the sale of semiconductors produced using American equipment to China's Huawei. It claimed the restrictions are part of efforts to defend "national security." The aim is to strangle Huawei, which the Chinese government has been nurturing like a doting parent. Beijing responded with plans to invest around W3 trillion in a domestic chip manufacturer (US$1=W1,234). The U.S. and China have entered a full-fledged war in the area of semiconductors, which have both industrial and military value.

      The semiconductor industry is more than just a business sector in the U.S. and China. The U.S. government has been demanding that Samsung, TSMC and other global chipmakers to build plants in the U.S., seeking to realign the semiconductor ecosystem. Intel rolled out the new "pRam" computer chip late last year, aiming to change the entire playing field. The Chinese government meanwhile has been planning since 2015 to invest W170 trillion by 2025 to boost the country's semiconductor self-sufficiency to 70 percent. Japan, which fell behind Korea in the global semiconductor race, is trying to get Intel and TSMC to set up production bases there.

      But even as the world's superpowers are rolling up their sleeves to win the global semiconductor war, the only plan the Korean government seems to have is to invest W1 trillion in chip development over the next decade. That pales in comparison to the W170 trillion China is spending over a decade. The government has if anything been obstructive. What was it doing when it took Samsung as many as five years to get power supply to its memory chip plant in Pyeongtake due to protests from residents there? At one time it attempted to unveil Samsung's proprietary semiconductor production information on the grounds of public good, which could harm the country's industrial interest as global competitors are hell-bent on beating the world's memory chip leader. And tough regulations are hindering production at chip plants that need to operate around the clock.

      Semiconductors account for more than 20 percent of Korea's total exports. They are key components in not only high-tech IT products but also precision-guided weapons, and a strong semiconductor industry helps a country bolster its national security. Korean companies became global players through their own efforts and ingenuity. But now the U.S. and Chinese governments have launched a semiconductor war, there is no telling what kinds of pressure Korean companies may have to endure. As a huge storm brews outside the country's borders, Korean businesses are having to worry about how they will be affected by bureaucracy and politics here rather than getting on with their vital job. Acquisitions and mergers with foreign companies, too, have ground to a virtual halt. Does the government have the faintest idea what it is doing?

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