US Urges "Prepare for Export Restrictions to Russia"... Domestic Companies Watch Situation Closely Amid Tension (Comprehensive)

Mention of Possible Sanctions Amid Potential Invasion of Ukraine

U.S. President Joe Biden (left) and Russian President Vladimir Putin
[Image source=Yonhap News]

[Asia Economy Reporters Heungsun Kim, Hyeyoung Lee, Hyunui Cho] The White House is considering banning exports of U.S. semiconductor components to Russia in response to Russia's invasion of Ukraine. Domestic companies manufacturing finished products (sets) such as automobiles and home appliances in Russia are closely monitoring the situation, concerned about potential production disruptions.

According to foreign media on the 19th (local time), officials from the White House National Security Council (NSC) recently told the Semiconductor Industry Association (SIA) in a call to "prepare new export restrictions against Russia, including blocking Russia's access to the global electronics supply in the event of Russia's invasion of Ukraine."

White House Signals Blocking Global Electronics Supply

The NSC informed the SIA that it is prepared to take unprecedented measures if Russia attacks Ukraine. An SIA official sent an email to member companies stating, "The NSC indicated that the situation in Ukraine is 'exceptional' and that all options are being actively considered."

A source told foreign media, "Verifying that IT protection for employees in Russia is adequate and preparing to halt exports to Russia could be part of the industry's preparation process in response to a potential Russian invasion of Ukraine."

Foreign media explained, "If the White House expands the 'foreign direct product rule'?originally established by the Trump administration to block semiconductor supplies to China's Huawei?it could halt shipments of semiconductors, computers, home appliances, telecommunications equipment, and other products worldwide made with U.S. technology."

While a White House spokesperson declined to confirm the call between the NSC and SIA, they stated, "We have consistently made clear that we are reviewing various options with allies and partners to impose severe economic costs if Russia invades Ukraine."

The SIA held a conference call with its members the previous day to detail the conversation with the NSC. A government affairs representative from the association said, "Given the possibility of broad export control measures, there could be unprecedented chaos. We are working to assess the potential impact on the global supply chain."

The White House also held discussions about new export sanctions with the Semiconductor Equipment and Materials International (SEMI) the previous day. A source said, "The association expressed concerns about the potential impact on U.S. technology during the call with the NSC."

Korean Companies Unavoidably Affected in Set Sector
"Future Sanctions and Scope Must Be Watched"

According to the Korea International Trade Association, Korea's semiconductor exports to Russia amounted to $75 million (approximately 89 billion KRW) last year, accounting for 0.8% of total exports ($9.983 billion). Semiconductor companies such as Samsung Electronics stated, "Since Russia's share in the export market is not large, there is unlikely to be an immediate direct problem if limited to semiconductors."

However, because semiconductors and related components are essential in finished products, if the U.S. imposes such sanctions, set manufacturers could be affected. Samsung Electronics operates a TV production line in Kaluga Oblast near Moscow. LG Electronics also manufactures home appliances and TVs in Luzha, on the outskirts of Moscow. An industry insider said, "It is difficult to predict exactly how U.S. export regulations targeting Russia will unfold, but if component supplies for major items such as home appliances, smartphones, and automobiles are restricted, local production and sales could face difficulties."

Notably, Samsung Electronics' smartphones hold over a 30% annual market share in Russia, ranking first among global manufacturers. Exports of automobiles and automobile parts to Russia ranked first and second among major export items last year, at $2.642 billion and $1.509 billion, respectively.

An official from the automotive industry said, "Exports to Russia of automobiles and automobile parts have been increasing since the second half of 2020, supported by strong domestic car sales locally. The intensity of U.S. export regulations will vary depending on their form, but in the short term, they could negatively impact Korean companies' exports."

Senior Researcher Kyunghwa Kim of the Trade Association's Trade Support Center said, "The impact on Korean companies will vary depending on whether the U.S. sanctions list on Russia includes semiconductors using U.S. technology and the products derived from them. We need to watch for further announcements."

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