South Korean politician urges US abandon China chip strategy

A prominent South Korean legislator strongly criticised Washington’s interventions in global semiconductor industry. This is a sign that Seoul is uneasy about US efforts to enlist Asian allies in its economic security agenda.

Yang Hyang Ja, a former Samsung executive and chip engineer who headed a ruling-party committee to assess South Korea’s competitiveness in semiconductors until the beginning of this year, stated that any measures taken to limit China from accessing or producing advanced chips could damage relations with Asian allies.

Yang, in an interview, said that if Washington continues to punish other nations by passing bills and implementing ‘America First” policies in an unpredictable manner, other countries may form an alliance to oppose the US.

She added, “The US is by far the most powerful nation in the entire world.” It should take into account more of the common values of humanity. It is not desirable to appear as though it was using its strength as an offensive weapon.

The US passed legislation that offers tens billions in subsidies to non Chinese chipmakers in exchange for limitations on their ability upgrade or expand their facility in China.

The Biden administration also implemented sweeping export controls for critical tools used in chip manufacturing to China, and has prohibited US citizens and companies from providing direct or indirect assistance to Chinese companies engaged in advanced chip manufacture.

Seoul is concerned that the US actions will trigger a Beijing backlash, disrupting carefully calibrated supply chain and threatening profit.

Lee Jae Myung, leader of South Korea’s leftwing Democratic Party, accused the conservative government for harming the nation’s economic interests and security by siding with the US, Japan, and China against Russia and China.

Yang, who was a member of the Democratic Party before she formed her technocratic party Hope of Korea in June, admitted that “US tech-war measures have not yet hurt our semiconductor industry because sanctions against China may actually reduce production, leading to higher costs”.

She added: “The more sanctions the US impose on China, the more China will strive to achieve rapid technological progress. China will increase its national support to achieve the goal. It will then pose a serious crisis for South Korea given China’s abundance of talent and raw materials.”

She said that the US should stop trying to shake and break up global value chains in order to gain something.

Yang said that the US had benefitted from South Korean expertise and Taiwanese expertise for manufacturing processor and memory chips, respectively. He added that it was “trying demolish the current status quo by sanctions”.

Analysts said that the US actions actually helped South Korean chipmakers, as they hampered the progress of their Chinese rivals.

They said that the biggest threat to South Korea’s semiconductor industry was not disruption of the supply chain, but rather the rise of Chinese state-backed rivals like YMTC. YMTC has made rapid advances in closing the technology gap with the leading Korean chipmakers within the Nand flash memory sector.

Troy Stangarone is a senior director at Korea Economic Institute of America. He notes that US tech giant Apple considered using YMTC Nand flash memory chips in the current iPhone 14 until pressure from US legislators made it abandon the option.

Stangarone said that the Apple-YMTC incident showed how far China has come in the Nand Memory sector and how Korean firms have benefited from US interventions.

has reported the US export controls have helped to thwart a South Korean semiconductor expert’s alleged attempt to build a “copycat memory chip factory” in China. The plant, according to Korean prosecutors “would have resulted in irrecoverable losses for the [Korean] industry of semiconductors”.

Yang acknowledged that the US-China war on technology had given South Korea more time to develop their own technologies, but added that South Korea’s semiconductor sector was in a very precarious position.

The South Korean lawmaker who played a key role in the passage of the K-Chips Act in South Korea this year, which increased tax credits for companies that invest in chip manufacturing, said that the country must address its neglect of its own engineering talents.

“In Taiwan technicians are treated better than judges and lawyers. In Korea, however, they do not receive the same treatment,” said Yang. Yang is also a part of a multi-party committee that focuses on cutting edge technologies.

She said that “smart Korean students” prefer to be doctors, dentists, or practitioners of oriental medicine rather than engineers. Only technology can free us from these geopolitical issues.