In a Switch South Korea Joining Chip4 Talks
In a Switch South Korea Joining Chip4 Talks is an important step forward for semiconductor manufacturing in the Asia-Pacific region, but it’s not yet clear if it will make any significant impact in the near future. There are several reasons why Korea has been slow to join the alliance, including concerns about a potential trade war with China.
South Korea joins the U.S.-led alliance
South Korea has faced a daunting national security and foreign policy dilemma over the past few years. Its neighbors, especially China, are increasingly aggressive and nuclear-armed, and the United States is committed to rolling back China’s rise. However, China is equally determined to check U.S. military power and supplant it in the region. As such, the domestic national security consensus remains divided and there are competing approaches to inter-Korean relations.
According to an unnamed high-level government official, chip decoupling will be a major economic impact for China. China is a major consumer of Korean memory chips, and 48% of its total exports last year went to China. This has led the Korean government to hesitate to respond to the US government. Meanwhile, China has criticized the alliance’s Chips 4 talks as “coercive diplomacy,” warning that participation could cause more damage than good.
China is driving China’s semiconductor self-sufficiency drive
China’s semiconductor self-sufficience drive is fueled by a variety of factors. The supply chain for semiconductors can be complex, with many segments located outside the country. Chinese manufacturers can benefit from cross-border financial services and access to customers worldwide. Many multinational companies choose China as an important node in their supply chains. China-based semiconductor manufacturers may have an advantage over their multinational competitors because they understand the Chinese market well.
China’s semiconductor industry has been hit hard by US trade policy, but YMTC has largely escaped the brunt of the escalating tensions between Beijing and Washington. While Huawei and Semiconductor Manufacturing International have been placed on Washington’s trade blacklist, YMTC has continued to flourish. The company is also leading efforts to reduce reliance on imported technologies, while also pushing innovation.
China’s retaliatory actions against South Korea after joining the Chip 4 alliance
China’s retaliatory actions have been unfriendly towards Korea and Seoul. However, an unnamed high-level government official said that the chip decoupling would be beneficial to both countries. It would mean that China would not have to worry about the national security of Korea and would be able to maintain the same openness in the industrial supply chain. However, the two sides should not rush the negotiations to protect their national interests.
South Korea has begun to engage in active diplomacy to appease Beijing’s fears. Seoul confirmed that it would participate in the Chip 4 alliance’s preliminary meeting in early September. During the meeting, Seoul will maximize national interests and aims to minimize the risks of retaliatory actions by China.
China’s influence on South Korea’s decision to join the alliance
China’s influence on South Korea’s Chip 4 talks has been a major issue in recent days. Beijing has been voicing its concern over the alliance and has threatened to retaliate if Korea does not join. South Korea’s chip industry has been largely dependent on China for critical items. Major Korean industries have set up diversified production facilities in China.
While South Korea has not formally joined the Chip 4 talks, there is evidence that it has been holding off because it does not want to provoke China. The South Korean government has repeatedly stated that it will not take part in the alliance if it causes an argument with China. It has also remained non-committal on some U.S. initiatives, despite public opinion that South Korea is more dependent on the United States in regional security and advanced chip technology.
