Yang Hyang-ja: "Join the 'CHIP4 Alliance' but We Must Take the Lead"

Concerns Over Dilemma Between US and China

"Samsung Electronics and SK Hynix Should Leverage Their 1st and 2nd Place in Memory Semiconductors"

Yang Hyang-ja, Chairperson of the Special Committee for Strengthening Competitiveness in the Semiconductor Industry. / Photo by Dongju Yoon doso7@

[Asia Economy Reporter Moon Chaeseok] As the United States pressures countries geographically close to China and home to major semiconductor companies, such as South Korea and Taiwan, to join the 'Chip4 Alliance,' a proposal has emerged that South Korea should instead take the lead in the negotiations.

Yang Hyang-ja, Chairperson of the Special Committee for Strengthening Semiconductor Industry Competitiveness, said in a phone interview with Asia Economy on the 20th, "We should join the Chip4 Alliance, but it must be in a way that we lead."

The United States has requested South Korea to join the 'Chip4 Alliance,' a technology alliance among the U.S., South Korea, Taiwan, and Japan, by the end of next month. Meanwhile, the U.S. political sphere is planning to provide some $52 billion (approximately 65 trillion KRW) in subsidies and incentives if foundry (semiconductor contract manufacturing) companies like South Korea's Samsung Electronics and Taiwan's TSMC invest in the U.S.

Along with this nurturing bill, there is also discussion about blocking semiconductor companies receiving U.S. support from cooperating with China in advanced semiconductor fields. This is because Korean companies heavily depend on U.S. equipment (supply side) and export large volumes of products to China. Given the high demand dependence on China, Korean semiconductor companies could face a dilemma.

Chairperson Yang emphasized, "We should first join the Chip4 Alliance, persuade China well, and after joining, we must take the lead in negotiations." The U.S. wants to incorporate South Korea's foundry, specifically Samsung Electronics. In the mid to long term, the plan is to establish a supply chain encompassing both memory and non-memory sectors domestically to prevent China from gaining global economic hegemony.

Chairperson Yang also said, "We should leverage the fact that Samsung Electronics and SK Hynix dominate the memory semiconductor market as first and second." The two companies hold a 70% share of the global market, a figure that neither the U.S. nor China can ignore. He stated, "The overall stance of the special committee is that we cannot ignore the message from the U.S. to join the 'technology alliance.' However, we should not just join unconditionally but lead negotiations so that Korea becomes an indispensable presence to both the U.S. and China."

Yang further mentioned, "Since we have such significant influence in memory semiconductors, we can use that to steer the alliance differently from what the two countries envision and even propose counteroffers. To make a proper 'deal,' we need to fully understand our current technological level and future growth potential."

He also emphasized the value of Samsung Electronics' foundry due to the rapid expansion of platforms in the U.S. and the semiconductor supply chain being mainly formed around fabless (design) companies like Nvidia and Qualcomm. Chairperson Yang said, "It is rare for the U.S. to be the first to make demands, so this Chip4 Alliance proposal is unusual. They see that relying solely on TSMC could create instability in semiconductor supply and are requesting a 'supply chain alliance' covering memory and foundry." He added, "From the U.S. perspective, Samsung Electronics is the only company besides domestic Intel and TSMC with the capability to operate a foundry business globally, making it necessary for U.S. interests."

From South Korea's standpoint, Chairperson Yang believes it is necessary to utilize the Chip4 Alliance to strengthen foundry momentum. Referring to the Nasdaq market capitalization trends over the past two years, he explained, "While the market cap of TSMC, the world's number one foundry company, increased by 48.9% from 348 trillion KRW to 518 trillion KRW, Samsung Electronics only grew by 11.2%, from 339 trillion KRW to 377 trillion KRW."

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