South Korea’s semiconductor know-how at the heart of China-US rivalry

Semiconductors were the focus of South Korean Foreign Minister Park Jin’s Aug. 8-10 visit to China. Organized in Qingdao, a military port housing the Northern Fleet, Mr. Park’s trip took place in a climate electrified by tensions around Taiwan and a tougher positioning of South Korean President Yoon Seok-youl towards Beijing. . But it is on a more economic subject that the head of South Korean diplomacy had to work: the revelations, before his departure for Qingdao, of Seoul’s interest in the Chip 4 project.

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The preliminary meeting of this Chip 4, which promises to be a major alliance in the field of semiconductors, is scheduled for late August or early September. It should bring together the United States, champions of ecosystems and equipment, Japan, leader in the supply of key materials, Taiwan, which is at the top of the manufacture of the latest generation electronic chips, and South Korea, expert in memory chips, with its giants Samsung Electronics and SK Hynix. China sees in this project imagined in Washington a direct threat directed against it.

Billions of grants

Mr. Park made it clear to his host, Foreign Minister Wang Yi, that “the decision to participate in the preliminary meeting is entirely based on national interests and is not intended to exclude or target any particular country”. Previously, Mr. Wang had criticized the United States – without naming them –, which “politicize the economy, instrumentalize trade and militarize standards, undermining the stability of global production and supply chains”. He called on Mr. Park to maintain “security and stability” of these chains.

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The Chip 4 project between the four dominant countries in the highly strategic sector – these chips are found massively in household appliances, automobiles, telephony or even industrial machinery – is to be compared to the promulgation, Tuesday, August 10, by the President American, Joe Biden, of the Chips and Science Act. This text aims to revive the production of semiconductors in the United States.

The discontent is on par with concerns from Beijing, which is heavily dependent on South Korea for its semiconductor supply.

It is accompanied by an envelope of 52.7 billion dollars (51.7 billion euros) in subsidies, which should benefit the Americans Intel, AMD and Qualcomm, but also foreign companies, such as Samsung. However, to benefit from it, the groups will have to commit not to invest in China for ten years. Samsung could no longer expand its Chinese factories in Xian and Suzhou. Ditto for SK Hynix and its DRAM and NAND production sites in Wuxi and Dalian. Enough to tighten a little more the measures already taken by Washington to limit China’s access to the latest semiconductor technologies.

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