Yoon and Biden Visit Semiconductor Factory... Strengthening the South Korea-US Alliance (Comprehensive)

The Core of the Korea-US Technology Alliance: Semiconductors and Batteries

[Image source=Yonhap News]

[Asia Economy Reporters Sunmi Park and Daeyeol Choi] On the 20th, U.S. President Joe Biden, visiting South Korea to meet domestic business leaders and tour business sites, has a clear intention. It reflects a desire to strengthen the South Korea-U.S. alliance through investments and business activities between companies from both countries. This is widely interpreted as a recognition that supply chain management has become more important than ever due to the deepening global economic decoupling caused by power struggles among major powers and the COVID-19 pandemic.

Alongside the military and security alliance, the technology alliance centered on the U.S. is seen as a key factor determining the outcome of the leadership competition over global hegemony. For the U.S., regaining superpower status and restructuring the disrupted international trade order makes collaboration with South Korean companies such as Samsung, SK, Hyundai Motor, and LG increasingly important.

▲Samsung Electronics Pyeongtaek Semiconductor Plant Line 1 Overview. (Provided by Samsung Electronics)

Yoon Launches ‘Semiconductor Superpower’... South Korea-U.S. Alliance Strengthens

President Yoon Suk-yeol will visit Samsung Electronics’ Pyeongtaek semiconductor plant together with visiting U.S. President Joe Biden. Samsung Electronics Vice Chairman Lee Jae-yong is expected to personally guide the tour.

This is President Yoon’s first visit to an industrial site since taking office, and also the first visit by a U.S. president to a semiconductor plant in South Korea. The joint visit by the two leaders to the Pyeongtaek semiconductor plant symbolizes the restoration of the global semiconductor supply chain and the strengthening of strategic cooperation.

Notably, President Yoon’s choice of a semiconductor plant as his first diplomatic venue is significant. It signals the official launch of the ‘Semiconductor Superpower South Korea’ strategy, aims to externally showcase the status of South Korea’s semiconductor industry, and demonstrates South Korea-U.S. cooperation on the global semiconductor supply chain issue, thereby reinforcing the comprehensive strategic alliance between the two countries.

The Yoon administration has designated the semiconductor industry, which leads South Korea’s exports and investments, as a ‘future strategic industry’ and set securing a technological gap as a national agenda. Last year, South Korea’s semiconductor exports amounted to $128 billion (based on MTI 3 units), accounting for 20% of total exports, while semiconductor equipment investment reached 55.4 trillion won, representing 55.3% of manufacturing investment.

Samsung Electronics’ Pyeongtaek semiconductor plant is the world’s largest semiconductor production base equipped with cutting-edge memory and system semiconductor (foundry) production facilities. It is regarded as a forward base for South Korea to achieve a technological gap in the semiconductor sector in the era of the Fourth Industrial Revolution. In particular, the Pyeongtaek plant serves as a link in the global semiconductor supply chain connecting Samsung’s Giheung and Hwaseong plants in South Korea with its Austin and Taylor plants in the U.S.

The semiconductor industry expects that the joint visit by the South Korea and U.S. leaders to the Pyeongtaek plant will have a ‘two birds with one stone’ effect: playing a role in resolving global supply chain issues and elevating South Korea-U.S. relations to a comprehensive strategic alliance including economic and technological cooperation.

An industry insider explained, "This ‘semiconductor meeting’ between the two leaders sends a message of the ‘South Korea-U.S. semiconductor alliance’ that supports the growth of South Korea’s semiconductor industry while actively responding to the U.S. industrial sector’s semiconductor demand. Furthermore, it can be interpreted as solidifying the comprehensive strategic alliance between the two countries."

"U.S. Needs New Means to Contain China... We Must Also Devise Response Strategies"

Batteries, which will be the core of electric vehicles and future energy sources, are also a key pillar of the South Korea-U.S. technology alliance.

Electric vehicles are expected to soon replace internal combustion engines and become the mainstream of the global automotive industry. Batteries will be widely used not only in transportation but also throughout daily life and various industries. Due to environmental regulations, the use of renewable energy will inevitably increase, and batteries are essential to store electricity and supply it as needed.

What makes the U.S. uneasy is China’s presence at key points of these next-generation foundational industries. The hegemony competition between the U.S. and China (G2) is ongoing, and China’s influence has grown at the upper levels of the value chains in major foundational industries such as semiconductors, electric vehicles, and batteries. Under the free trade regime established in the 20th century, with clear international division of labor, China has increased its influence on the global stage by leveraging resources like rare earth elements as strategic tools.

Experiencing firsthand how supply chains can be disrupted by unforeseen external shocks such as climate change or large-scale infectious diseases, which can collapse everyday social systems, has heightened the importance of economic security. This is why President Biden issued an executive order immediately after taking office to investigate global supply chains focusing on semiconductors, batteries, rare earths, and medical supplies. After about 100 days of investigation, the conclusion was that dependence on certain countries like China is high, and efforts should be made to improve supply chains among allied countries.

The Indo-Pacific Economic Framework (IPEF), aimed at containing China, is a major topic during Biden’s Asia tour, reflecting this context. IPEF, expected to include the U.S., Japan, Singapore, Australia, and New Zealand, is pursuing agreements in six key areas: digital economy and technology standards, supply chain resilience, decarbonization and clean energy, infrastructure development, and labor standards.

Gahyun Park, Senior Researcher at the Korea Institute for International Trade and Commerce, assessed, "With the lifting of lockdowns on major production facilities and regions to curb COVID-19 spread and improving domestic and international conditions, severe supply chain issues are expected to ease somewhat, but many uncertainties such as resurgence, climate change, and resource nationalism remain." She added, "With geopolitical issues like the U.S.-China hegemony dispute, supply chains built primarily for efficiency are being reorganized around stability, requiring strategies to respond to structural changes."

Sooyeop Na, Senior Researcher at the Korea Institute for International Economic Policy, said, "The Biden administration’s basic view is that past unilateral sanctions and WTO rule enforcement have limitations in fundamentally changing trade relations with China, so a new strategy is needed. As U.S.-China trade conflicts expand into confrontations between the U.S., European Union (EU), and other major countries against China, the use of national and economic security as grounds for sanctions against each other will become more prominent."

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