Review to Wrapped up on June 4

U.S. President Joe Biden

The U.S. government is about to complete its supply chain examination on June 4 with regard to the four key items of semiconductor chips, electric vehicle batteries, rare-earth elements and biopharmaceuticals.

U.S. President Joe Biden signed an executive order to this end on Feb. 24. The outward purpose of the executive order is to strengthen the foundation of the U.S. manufacturing sector, which revealed its vulnerability after the outbreak of COVID-19. The real purpose is to make it more competitive so that its reliance on China can be lowered. At present, China is developing its semiconductor and electric vehicle battery technologies at a rapid pace and the United States is highly dependent on China when it comes to the elements and pharmaceutical products.

It is semiconductor chips that constitute the key part of the examination. The future measures of the United States in this industry are likely to have a substantial impact on South Korea's semiconductor industry as its semiconductor exports to China and Hong Kong account for more than 60 percent of its total semiconductor exports, and it is a key part of the Northeast Asian supply chain on which the United States relies for chip procurement.

According to the Federation of Korean Industries, the measures may include import replacement, and it may result in a GDP decrease of 0.35 percent and 0.07 percent on the part of China and South Korea, respectively. “In addition, the output of the Chinese and South Korean electrical and electronics industries will decrease 0.32 percent and 0.18 percent, respectively,” it said, adding, “There is also a possibility that China will resist the measures and South Korean semiconductor companies will face a dilemma between their two biggest clients.”

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