Korea Institute for Industrial Economics Asserts

U.S. President Joe Biden at the supply chain conference of the White House on June 12

The Korea Institute for Industrial Economics and Trade said on July 4 that the Joe Biden administration’s global supply chain policies may adversely affect the South Korean economy in the long term.

According to the institute, the policies are expected to have a positive effect on South Korea’s semiconductor and electric vehicle battery industries in the short term. “The U.S. government is expected to provide more incentives for companies investing in the United States and this can contribute to the business conditions of South Korean companies in the industries,” it said, adding, “With the United States expected to further protect its advanced semiconductor industry, South Korean companies can get an opportunity to keep further ahead of Chinese companies.”

It also mentioned that the U.S. electric vehicle battery market is about to show a surge in demand and South Korean suppliers are expected to get the lion’s share as the United States will keep Chinese electric vehicle battery suppliers at bay.

The institute, however, made negative comments as to long-term impacts. “South Korean semiconductor manufacturers’ presence in the global market will be affected as the United States enhances its competitiveness in the sector and, in the electric vehicle battery sector, the United States will concentrate its assistance on U.S. companies and reduce its incentives for foreign ones in the long term,” it explained.

“South Korea needs to cope with the policies with long-term perspectives,” it advised, pointing out that the United States and many other advanced countries are handling supply chain issues from the viewpoint of national security while national security is still separate from technology and industry in South Korea.

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