[ANALYSIS] Seoul expected to join Washington-led ‘Chip 4’ alliance

Korea still needs US support for country’s chip ecosystem to evolve

By Kim Yoo-chul

Modern history teaches us that economics and political science are inseparable, but in recent decades the world has seen some sideshows on the two. This political short-sighted eye has weakened the economy, and the looming Cold War between the United States and China is a vivid example.

The impact of the COVID-19 on the US backbone industry is enormous, with the automotive and technology sectors being severely impacted by a serious shortage of critical manufacturing components such as semiconductors and batteries. This scene was interpreted as an important reminder of the importance of understanding high-level vulnerabilities in today’s connected world.

In particular, the supply chain problems of semiconductor components caused by COVID-19 attracted the attention of US leaders. The seriousness of the shortage is because it can have a serious impact on emerging technologies that Washington has identified as a major strategic growth driver. AI, Quantum computing, 5G, Internet of Things. All of these technologies require sophisticated chips.

The White House responds positively to this situation with the aim of US President Joe Biden continuing to promote further investment in US soil and land production with the help of Asians to strengthen its allies. Signed the presidential decree. In addition, Washington’s goal of building a stronger global component value chain focused on semiconductors aims to seek a “partial technological separation” from China.

With the pandemic warning countries that a robust semiconductor supply chain is needed, the United States is more resilient given its widespread use in items such as automotive, electrical equipment, and a wide range of next-generation technologies. I think it is increasing. A must-have in the current environment. In this regard, South Korea, Taiwan, and Japan are at the heart of the Washington-led semiconductor alliance known in South Korea as “Chip 4.”

“The global shortage of semiconductors has increased support from Asian partners. Taiwan-based foundry chip maker TSMC wants to seek more cross-strait support from the United States. Meanwhile, global memory chip maker Samsung wants to boost its foundry business with support from the United States. From a US perspective, Seoul’s participation in the Chip-4 Initiative is highly necessary, “said a senior diplomatic source in Seoul over the phone.

Beijing sees democratically dominated Taipei as a departure from mainland China and needs to recapture it by force
Both the United States and China are focusing on revitalizing the semiconductor industry, but both countries are growth indicators There is a difference in the focus and characteristics. In terms of chip production, China leads the global market with a 24% share, followed by Taiwan (21%), South Korea (19%), and Japan (13%). According to the Semiconductor Industry Association (SIA), only 10 percent of chips are manufactured in the United States.

U.S. Secretary of Commerce Gina Raimondo speaks during an address at Brown University, March 15. The Biden administration and congressional Democrats are warning of dire ramifications for the economy and for national security if Congress fails to pass a bill by the end of July that is designed to boost semiconductor manufacturing in the United States. AP-Yonhap

 

While China is the global consumer market, Beijing aims to be “semiconductor self-sufficient” as it focuses on the workforce and capital-intensive segments of wafer manufacturing, assembly, testing and packaging. .. The United States strives to promote knowledge-driven activities, along with chips design, manufacturing equipment, and intellectual property (IP), which are segments that require solid infrastructure and a skilled workforce. According to the White House, semiconductor companies, including Samsung, have announced an investment in the United States of nearly $ 80 billion by 2025.

Both Samsung and TSMC operate huge foundry chip facilities in the United States. Samsung and its competitor SK have wafer manufacturing, assembly, and testing facilities in mainland China. TSMC and Samsung are the only global players manufacturing chips with processing nodes less than 7 nanometers. This status means that we support major US technology companies such as Apple, Qualcomm, NVIDIA, AMD, Broadcom, and Xilinx.

“Samsung and TSMC have become the largest beneficiaries after the United States.” Security concerns impose restrictions on Huawei’s suppliers. Importantly, as the United States is trying to partially separate semiconductors from China, South Korean and Taiwanese companies will have more aid programs available, “according to data collected by market research firm Omdia. And 2021.

Korea joins ‘Chip 4’ but there is no full decoupling in tech

The South Korean presidential office is in talks with the United States on how to strengthen cooperation on semiconductors after requesting the United States to inform South Korea whether it will join the Chip-4 alliance by August, according to local reports. Said there was. Year.

Japan and Taiwan have promised to join a US-led chip alliance, officials said. Samsung Electronics officials in Seoul declined to comment.

South Korea’s involvement in the implementation of the Indo-Pacific Economic Framework (IPEF) by the United States and President Yun Seok-Yul’s desire to transform the Washington-Seoul partnership into an “economic and security alliance based on cooperation between the supply chain and developed countries.” Given the aspirations, US President Joe Biden said in a statement at a recent summit in South Korea “Technology”-officials and analysts said South Korea would join the alliance following Taiwan and Japan.

From wafer manufacturing to software and semiconductor devices, it’s important to get US support in building a high-level chip ecosystem. It is entirely possible for the United States to allow only its allies to use US technology, as evidenced by Washington’s sanctions on Huawei. “.

In this regard, Applied Materials, the world’s leading semiconductor equipment manufacturer, has agreed with Gyeonggi Province to establish a next-generation semiconductor research center. The agreement confirmed that ASML, the Netherlands-based company, and Tokyo Electron, USA and Japan, plan to build a semiconductor research center in the state where state-of-the-art Samsung and SK chip factories are located.

Washington doesn’t want full semiconductor decoupling from Beijing, so its allies want to cancel a trade with China, V’s chance The US is imminent for stricter semiconductor export controls or secondary sanctions We rarely take action.

This illustration shows U.S. Treasury Secretary Janet Yellen, left, and an actual view of LG Science Park, western Seoul. Korea Times file

“Washington officials have no doubt about the fact that the cost of completely separating chips between the United States and China will be enormous. The Chip 4 alliance does not directly threaten China’s national security, so Seoul China is unlikely to retaliate against South Korea even after it joins Chip 4. Samsung and SK are two of the top foreign investors, and their partnership with senior Chinese officials is fairly strong. ” Said.

The second phase of Samsung Electronics’ NAND flash chip production line in Xian, northwestern Shaanxi, will include two wafer manufacturing plants and a packaging and test plant as a result of a $ 25 billion investment. It will go into operation in 2021 and is expected to produce more than 40% of Samsung’s NAND flash capacity.

SK operates DRAM wafer manufacturing facilities, and packaging and test facilities in Wuxi, Jiangsu, and Chongqing, Sichuan, respectively.

The SK C2 plant in Wuxi, the first 12-inch wafer fabric that went into operation in 2006, was expanded with an additional investment of $ 780 million and began mass production in mid-2019, the company said. rice field.
China is South Korea’s largest trading partner. According to data from the Korea International Trade Association (KITA), exports to China accounted for 48% of the country’s $ 69 billion worth of memory chip-led exports in 2021.

Chinese Korean companies have reported huge losses due to China’s economic retaliation against the Korea-US agreement. Deployment of THAAD missile defense system.

“This is because China sees the THAAD system as a direct and imminent threat to national security. When it comes to chips, China lags far behind the United States in terms of technology level and focus segment.” Said.
In addition, the Yellen administration is focusing on the importance of developing a domestic battery supply chain for electric vehicles (EVs), as well as energy storage, given that the United States is heavily dependent on imports.

Treasury Secretary Janet Yellen will emphasize why she remains solid. The South Korean-US partnership on batteries is paramount to strengthening the supply chain.

Yellen will visit LG’s Technical Research Center in Seoul from July 19th as part of his two-day visit here. “While Yellen is visiting LG Science Park, she will be briefed on the strengths of LG’s battery technology,” officials said. LG Chem is the largest shareholder of LG Energy Solutions (LGES), which operates a joint venture with General Motors (GM) in the United States.

Yellen is likely to drive policies to strengthen and grow the US economy and its middle class and is more powerful and resilient to avoid costly turmoil that encourages inflation as well as the United States. Emphasize why maintaining a supply chain is so important. Boosted states, but globally.

South Korea also has some of the world’s leading battery manufacturers such as LGES, Samsung SDI, and SK.

 

Credit/Source : https://www.koreatimes.co.kr/www/tech/2022/07/133_332901.html

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