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South Korean Companies' Dilemma Deepening over U.S.-China Trade War
Torn Between 2 Major Trading Partners
South Korean Companies' Dilemma Deepening over U.S.-China Trade War
  • By Jung Min-hee
  • June 10, 2019, 11:25
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South Korean companies' dilemma is deepening as the United States and China are increasing pressures on them to take their sides in the ongoing trade war.
South Korean companies' dilemma is deepening as the United States and China are increasing pressures on them to take their sides in the ongoing trade war.

The National Development & Reform Commission of China told Samsung Electronics and SK Hynix on June 4 and 5 to continue to supply their components to Chinese companies. Earlier, the Ministry of Foreign Affairs of China put the same pressure on South Korea as well. Likewise, U.S. Ambassador to the Republic of Korea Harry Harris recently urged South Korean companies to join the anti-Huawei campaign. Those companies doing business with Huawei are expressing concerns under the circumstances.

Their annual supply to Huawei amounts to US$10.65 billion. For example, Samsung Display is supplying Huawei with OLED panels and Samsung Electro-Mechanics and LG Innotek are producing camera modules for use in Huawei smartphones.

SK Hynix is likely to take a direct hit, too. Its quarterly sales from memory chip supply to Huawei are estimated at no less than one trillion won. Meanwhile, Samsung Electronics is likely to suffer less in that Huawei accounts for only 5 percent of its semiconductor sales and it can benefit from the anti-Huawei campaign when it comes to smartphone and telecommunications equipment supply.

Both SK Hynix and Samsung Electronics reached an internal conclusion last month that they cannot meet the U.S. request for boycotting Huawei. Still, they are hesitating to side with the Chinese company as their major clients include American companies such as Apple, AT&T and Verizon as well.