Targeting China... Electric Vehicles and Semiconductors Are Key Domestic High-Tech Industry Drivers

Biden Emphasizes 'Semiconductors and Batteries' in Infrastructure Investment Plan
Determined Will to Compete with China
Indirect Benefits Expected for Domestic Industries
"Requires Political and Diplomatic Efforts from Both Countries"

[Asia Economy New York=Special Correspondent Baek Jong-min, Reporters Kwon Hae-young, Jo Yoo-jin, Kim Su-hwan] The $2.25 trillion infrastructure investment announced by U.S. President Joe Biden recalls President Franklin D. Roosevelt’s ‘New Deal’ policy aimed at escaping the Great Depression in the 1930s. Unlike civil engineering-centered economic development, this plan is evaluated as ‘New Deal 2.0’ because it focuses on fostering advanced industries where the U.S. has shown weaknesses to prepare for competition with China. Since the U.S. has pledged to nurture the semiconductor and battery sectors led by Korea, significant impacts on our industry and economy are expected.

◇Need for Response from Korean Government and Companies= Although the content of President Biden’s speech was largely in line with market expectations, the emphasis on the need for investment in the semiconductor and battery sectors, specifically to compete with China, stood out. Given the rapid rise of China and the shortage of supply chains within the U.S. in these sectors, there was a strong determination to prevent China from seizing U.S. technological leadership and industrial dominance and emerging as a rival nation.

Since the nation’s key infrastructure depends on semiconductor chips, the Biden administration’s view is that reliance on foreign companies must be reduced. Earlier, Intel, the world’s largest semiconductor company, withdrew its plan to stop contract manufacturing (foundry) and decided to invest $20 billion to build two factories in Arizona, reflecting the Biden administration’s stance.

The Wall Street Journal (WSJ) reported that as the global semiconductor chip shortage became apparent earlier this year and concerns grew that the U.S. might be overtaken by China in core technologies, the bill could gain momentum for passage.

The electric vehicle (EV) and battery sectors are also in focus. President Biden said, "We will focus on strengthening the U.S.’s competitiveness in the global EV market." He announced plans to expand EV subsidies to lower EV prices and build approximately 500,000 EV charging stations nationwide by 2030.

Currently, it is known that there are 41,400 charging stations in the U.S. The plan also includes replacing 50,000 diesel-engine public transportation vehicles with eco-friendly vehicles and converting more than 20% of school buses to electric vehicles.

Given that the recent shortage of automotive semiconductors and the dispute between LG Energy Solution and SK Innovation led to production halts and job losses in the U.S. automotive industry, this policy is likely influenced by those factors, so its impact on our industry cannot be excluded.

Jeon Bong-geol, professor of economics at the University of Seoul, analyzed, "The infrastructure investment announced by the Biden administration focuses on climate change, so some domestic renewable energy companies may benefit. If the U.S.’s large-scale investment revitalizes the overall economy, it will have a positive effect on our economy as well."

On the other hand, Joo Won, head of economic research at Hyundai Research Institute, predicted, "Although the U.S. has announced plans to invest in renewable energy, electric vehicles, and semiconductors, most of the investment benefits will return to American companies. We will only enjoy indirect benefits from the U.S. economic stimulus."

Since the Biden administration’s large-scale economic stimulus card is largely aimed at countering China’s rise, there are also calls for the government to consider ways to maximize our economy’s benefits amid the accelerating decoupling of the U.S. and Chinese economies.

Jung In-gyo, professor of international trade at Inha University, said, "The Biden administration’s expanded infrastructure investment reflects the intention that the U.S. cannot simply watch China’s ‘Belt and Road Initiative’ and must advance cooperation among Western countries. To enjoy the economic effects of U.S. infrastructure investment, political and diplomatic efforts must accompany it. The government needs to clarify its position on how to maximize benefits between the U.S. and China."

◇Why Pittsburgh Was Chosen as the Site for the ‘U.S. Reconstruction Declaration’= Attention is also focused on why President Biden chose Pittsburgh to declare a complete overhaul of the U.S.’s outdated infrastructure, a measure tantamount to national reconstruction.

Pittsburgh is where Biden’s presidential campaign began. After being nominated as the Democratic presidential candidate last year, he visited here first. He also held his final campaign rally in Pittsburgh the day before the election. Political media outlet Politico explained that politicians visit Pittsburgh to gain support from white working-class voters.

President Biden’s mention in the speech that a large number of quality, well-paying jobs will be created can be seen as an effort to secure support from the working class and mitigate resentment from marginalized groups that may arise during the transition away from fossil fuels.

Bloomberg News evaluated that Pittsburgh’s transformation from the ‘Rust Belt,’ a once-declining industrial area, into the ‘Brain Belt’ through fostering advanced technology industries was a factor considered in the choice.

This content was produced with the assistance of AI translation services.