After Semiconductors, Will Batteries Also Be Sandwiched Between the US and China?

Biden's Key Infrastructure Improvement Products
Possibility of US Pressure Amid Strong Chinese Influence
Some Say Increased US Investment Has Minimal Impact

U.S. President Joe Biden is speaking during a visit to GM's electric vehicle factory, Factory Zero. The electric pickup trucks being developed by GM will be equipped with batteries made by a joint venture with LG.

[Asia Economy Reporter Choi Dae-yeol] As the possibility arises that the U.S. government may block SK Hynix's investment in its China operations for military reasons, attention is turning to whether similar moves will be seen in another key industry: the battery sector.

Batteries, along with semiconductors, are among the sectors that U.S. President Joe Biden ordered to be reviewed immediately after taking office, and they are considered core products in the massive infrastructure improvement efforts promoted by the U.S. government, including electric vehicles and energy storage systems (ESS).

According to foreign media and industry sources on the 19th, while semiconductors have clear strengths and weaknesses for the U.S., the government views the battery sector as vulnerable across all areas?from finished product cell manufacturing and development to intermediate goods and raw materials. A supply chain review report released by the White House shows that China holds a market share ranging from two-thirds to as much as 80% in battery raw material refining, intermediate goods, and cell manufacturing. If the U.S.-China hegemonic competition spreads to the battery sector, there is a high likelihood of a global supply shortage. China has previously disrupted the international trade order by leveraging rare earth elements.

SK Battery America’s electric vehicle battery factory built in Georgia, USA

However, given the immediate shortage of battery supply needed to address climate change and carbon neutrality, it is expected that the U.S. will take a mid- to long-term approach rather than imposing measures that would immediately disrupt production as it did with semiconductors. The recent active investment by Korean battery companies in the U.S. could also be a burden for the U.S. government.

Korean battery companies have increased investments over recent years by establishing or expanding large-scale factories in China and the U.S. LG Energy Solution plans to invest 5.7 trillion won to expand battery facilities in China by 2025 and has completed about 80% of this investment so far. It has also committed to investing over 5 trillion won in the U.S., where it is building a joint venture factory with General Motors (GM). SK On completed factories in Changzhou, Huizhou, and Yancheng, China, from last year to early this year and has decided to build an additional Yancheng 2 factory. SK On is also planning to establish a large-scale battery production base in the U.S. through a joint venture with Ford. Samsung SDI has steadily invested in both the U.S. and China by establishing joint venture factories or new facilities.

Lee Sung-woo, head of the Asia Trade Team at the Korea Chamber of Commerce and Industry, said, "The U.S. does not want China to upgrade in new industries such as semiconductors and batteries, so companies with factories in both countries will inevitably face some damage. However, investments for carbon neutrality and environmental regulations are difficult for the U.S. to oppose unilaterally, and other general manufacturing sectors are unlikely to be significantly affected."

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