Semiconductor Alliance

South Korean President Yoon Suk-yeol and U.S. President Joe Biden visit Samsung Electronics’ Pyeongtaek plant on May 20.

South Korean President Yoon Seok-yeol and U.S. President Joe Biden visited Samsung Electronics’ plant in Pyeongtaek and declared a new alliance in the semiconductor industry on May 20.

Experts point out that the South Korean government needs to analyze what can be expected from it cool-headedly while checking how China will respond. In addition, they are urging the government to provide more support for material, component and equipment suppliers in the industry.

“The alliance implies that the United States opted for South Korean companies as production partners instead of TSMC, which is exposed to geopolitical risks,” said the Korean Society of Semiconductor & Display Technology, adding, “The semiconductor industry of South Korea is expected to further grow based on the alliance.”

“The positive aspects of the alliance include the fact that South Korean semiconductor companies now have more access to U.S. technology and equipment,” said the Korea Institute for Industrial Economics and Trade, continuing, “Still, details of the alliance are yet to come out and close monitoring is still needed.”

Samsung Electronics vice chairman Lee Jae-yong (left) greets U.S. President Joe Biden at the company's Pyeongtaek plant on May 20. 

Seoul National University chair professor Hwang Chul-sung pointed out that the practical economic advantages of the alliance may be less than expected as it may act as a hindrance to business with China. “Equipment transport to Xi’an and Wuxi, where Samsung Electronics and SK Hynix have plants, is becoming difficult these days,” he said, adding, “The United States may put more and more pressure simply because they have the plants there but the truth is that the Chinese market is as important as the U.S. market.”

According to the Korea International Trade Association, 59.7 percent of the output of the South Korean semiconductor sector was exported to China and Hong Kong last year, Chinese companies manufacture consumer electronics and so on with the products, and the companies’ dependence on the memory chips is practically 100 percent for now.

“The semiconductor sector of South Korea needs to strengthen itself by investment and R&D expansion and foreign investment attraction while actively participating in the U.S.-led supply chain,” the institute continued to say, advising, “Investment in the United States should be simultaneous with domestic incentive expansion and industrial ecosystem improvement so that U.S. semiconductor companies can be attracted to technical cooperation in South Korea.”

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