Even after Lee Jae-yong, vice chairman of Samsung Electronics, returned to Korea on May 19 after visiting a semiconductor plant in Xian, Shanxi Province, Chinese media outlets are reporting on his visit. Referring to the U.S.-China semiconductor war, they lambasted the U.S., while issuing a warning to Korean companies.
On May 20, China's state-run media outlet Huanqiu published an article titled "Why Samsung Vice Chairman Visited Xian Semiconductor Factory." Referring to Korean news reports that came out right after Lee’s visit to the Xian plant on May 18 (local time), the article said, "Korean media organizations reported that Lee's visit to the Xian semiconductor plant was aimed at emphasizing his will to achieve ‘Semiconductor Vision 2030’." Until here, the report carried the same story as that published on the day of Lee's visit to Xian.
What it really wanted to say came after that. It criticized U.S. restrictions on China and sent warning messages to Korean companies. "The U.S. is currently choking China in the semiconductor sector," the report said. "The U.S. government is asking chipmakers such as TSMC to build factories in the U.S. to reorganize the ecosystem of the semiconductor industry." It then noted China's status in the global semiconductor market. “According to the Boston Consulting Group, the U.S. semiconductor market accounts for less than 25 percent of global demand. About 80 percent of U.S. industrial sales come from export markets, including China. According to the U.S. International Trade Commission, China accounts for about 23 percent of global demand.”
The report also said, "The risk of excluding U.S. semiconductor companies from the Chinese market could trigger a major structural change in the global semiconductor industry." It continued to say, "If substantial technology separation between China and the U.S. takes place, the global market share of the U.S. semiconductor industry will fall 18 percent, its sales will contract 37 percent, and research and development spending will drop 60 percent, which will likely lead to a loss of 124,000 jobs in the U.S. and a loss of global leadership."
The report also gave a warning message to South Korea. "South Korea may overtake the U.S. as the world's semiconductor leader in the short term, but China may take the lead in the long run.” Then, it mentioned that Korean chipmakers were also concerned about sales. It stressed that SK Hynix's sales in China totaled 3,170.7 billion won in the first quarter of this year with orders from Huawei accounting for 44 percent.
However, it did not mention Samsung Electronics, which is likely to receive benefit from U.S. sanctions against Huawei. Samsung Electronics can increase its market share in the foundry sector if there is a problem in the relationship between TSMC and Huawei. Moreover, if Huawei has problems in delivering products and receiving additional orders due to production disruptions, Samsung Electronics can also benefit from it in the smartphone and communications equipment markets.
Korean semiconductor companies are concerned that China may step up pressure on Korean companies as it faces formidable obstacles from the U.S. in pushing for the localization of semiconductors. "Just in proportion to the Trump administration's demand for Korean companies to expand investment in the U.S., the Chinese government is expected to step up pressure on Korean companies " an industry insider said.