Seoul Supposed to Reply by Aug. 31

U.S. President Joe Biden (center) and South Korean President Yoon Suk-yeol (far left) visit Samsung Electronics’ semiconductor plant in Pyeongtaek, South Korea on May 20.

The South Korean government is in a dilemma as the United States is urging it to join its alliance in the global semiconductor sector. In the alliance, South Korea can strengthen its supply chain in the industry. However, joining it also means Samsung Electronics and SK Hynix may become more vulnerable to China-related risks.

The South Korean government is supposed to give a reply on whether to participate by Aug. 31. The anti-Chinese four-state alliance the United States is working on is to further cooperate with South Korea, Taiwan and Japan in the industry. The concept was suggested in March this year and a working-level meeting is scheduled for August to discuss specifics.

South Korea’s dilemma lies in the fact that the business in China of Samsung Electronics and SK Hynix is large. Samsung Electronics’ only NAND flash plant in located in Xi’an and the plant accounts for more than 40 percent of its NAND flash output. SK Hynix produces DRAM chips in Wuxi and this production accounts for 45 percent of its total DRAM chip production.

According to most experts, South Korea is likely to become a member of the alliance in the end. “The United States is leading the equipment and software segments of the industry, Taiwan is the very foundry leader, Japan is taking the lead on the component and material sides, and South Korea cannot produce chips without them,” one of them said, adding, “What the South Korean government needs to do is to minimize potential damage to South Korean companies by pursuing pragmatism between the United States and China.”

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