[ANALYSIS] Korea seeks US support for 'backbone industries'

Asia's Tech News Daily

[ANALYSIS] Korea seeks US support for 'backbone industries'

U.S. President Joe Biden holds up a silicon wafer in the Roosevelt Room of the White House, April 12, during the virtual CEO Summit on Semiconductor and Supply Chain Resilience. AP-Yonhap

By Baek Byung-yeul

Korea is actively seeking support from the United States to keep up the competitiveness of its core export items such as semiconductors and steel, at a time when securing and protecting capabilities of key industries has emerged as a crucial task.

The Ministry of Trade, Industry and Energy said Monday that it sent a delegation led by Kim Jeong-il, chief of the Office of International Trade and Legal Affairs, to Washington, D.C., in response to the U.S. government’s recent request for Korean semiconductor companies active in the U.S. to share confidential information.

During the visit, the delegation met with Jeremy Pelter, deputy under secretary at the Bureau of Industry and Security of the Department of Commerce, and delivered concerns of the Korean companies regarding the information sharing request.

“Regarding Washington’s demand for information to Korean semiconductor companies, he conveyed Korean companies’ concerns to Deputy Under Secretary Jeremy Pelter in the meeting,” the trade ministry said.

The visit came after the U.S. government’s recent call for global chipmakers such as Samsung Electronics and SK hynix to submit confidential information, including lists of their clients, by Nov. 8. Washington claimed the submission of the information should be voluntary, but Secretary of Commerce Gina Raimondo warned chipmakers that her department may invoke the Defense Production Act (DPA) or other available measures to force them to hand over requested data.

The information request comes in response to the prolonged global chip shortage that has caused severe production disruptions for major U.S. carmakers. The move shows that Washington is on track to gain a strategic edge in its continuing hegemonic conflict with China.

Feared for being sandwiched between the two superpowers, government officials have continued to relay Korean companies’ concerns about the unprecedented request. “We need to respond with three principles in mind ― corporate autonomy, government support and cooperation between Korea and the U.S,” Finance Minister Hong Nam-ki said, Oct. 18.

The trade ministry said Kim also demanded that Korea be treated in line with the status of an ally regarding section 232 of the Trade Expansion Act, as the U.S. and the European Union are expected to reach an agreement on an exemption of tariffs for steel and aluminum imports on Nov. 1.

In 2018 during the Trump administration, the U.S. began implementing the section 232 measure which grants the U.S. president the authority to impose restrictions on products that have been determined to pose a threat to its national security.

As a result, the U.S. began imposing 25 percent and 10 percent tariffs, respectively, on steel and aluminum from overseas companies. Korea was excluded from the list of high-tariff countries, but had to accept a quota system limiting exports to 70 percent of the average volume Korea had exported to the U.S. over the previous three years. Accordingly, Korea’s annual steel product exports to the U.S. could not exceed 2.68 million tons.

Given chips and steel are Korea’s core export items, opinions have risen that any decision to share such critical information with the U.S. will consequently cause adverse results, as China is equally important to Korea and comparable to the U.S. in terms of the significance of industrial transactions. Samsung and SK have invested more than $15 billion in semiconductor plants in China.

A high-ranking government official told The Korea Times previously that the issue has become a matter of national security and intellectual property, as China could ask domestic firms to release confidential information, just like the U.S. has.

Samsung Electronics, the world’s leading memory chipmaker, has been operating a massive foundry chip-making plant for more than a decade in Texas. The company is also set to announce the location of its new $17 billion plant, also likely to be in Texas, when Samsung chief Lee Jae-yong signs off on the deal.

On the other hand, China is also one of Samsung’s key markets. The firm operates several chip plants there with assistance from Beijing ― similar to the arrangement with the U.S.

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