[The Editors' Verdict] Semiconductor Strategy Must Take Global Geopolitics Into Account

[Asia Economy Reporter Choi Il-kwon] The moment the United States began to exert significant influence in the Middle East, a region dominated by Europe, was in 1932 when Standard Oil of California (now Chevron) acquired oil exploration rights in Saudi Arabia. Until then, oil had been discovered in neighboring countries like Iran and Iraq, but not in Saudi Arabia. For the U.S., it was a gamble.

By the early 20th century, the discovery of oil and gas in the Middle East had already initiated geopolitical shifts between Europe and the United States. As the U.S. established relations with Saudi Arabia and oil was discovered there, American influence gained a foothold that surpassed Europe. Helen Thompson, a professor of political economy at Cambridge University, noted in her book Disorder that "the discovery of oil in the Middle East placed Europe, which had long dominated the region, at a disadvantage compared to the U.S. and Russia," and that "acquiring Saudi oil exploration rights was a leverage point for the U.S. against Europe." Amid Russia's southward push to secure warm-water ports and energy, and the U.S.'s life-or-death struggle to secure energy, Europe?comprising major countries like the UK, Germany, Italy, and France?failed to exert power due to conflicting interests. Germany allied with Russia on energy supply, while Italy leveraged Turkey. This set the stage for the Cold War between the U.S. and Russia.

Exactly 90 years after the U.S. secured exploration rights in Saudi Arabia, in 2022, geopolitical changes are emerging centered around semiconductors. Coincidentally, the "America First" policy proclaimed by President Woodrow Wilson 100 years ago remains relevant in U.S. politics today. The stage has shifted from the Atlantic and the Middle East to the Pacific and Northeast Asia. The U.S. places semiconductors at the core of its hegemonic competition with China. It is reorganizing supply chains and concretizing plans to form a "Chip 4 Alliance" by bringing together South Korea, Japan, Taiwan, and others. Preparatory meetings for the semiconductor alliance are scheduled soon.

What strategy do we have amid these changing geopolitical conditions? Recently, at the Macroeconomic and Financial Situation Review Meeting chaired by President Yoon Suk-yeol, both energy and semiconductor experts attended, drawing attention. Some viewed this as a case that clearly revealed the core of the crisis. A senior official from the presidential office said, "Exchange rates and deficits ultimately manifest through exports and imports, and the industries that represent these are semiconductors and energy," adding, "It was a gathering of relevant experts in one place."

However, our strategy regarding semiconductors, which are shaking the global balance of power, remains unclear. Although the government atmosphere leans toward participating in the "Chip 4 Alliance," there are voices within that argue for using the term "consultative body" instead of "alliance" to be mindful of China. This "strategic ambiguity" risks only increasing confusion among participating countries and is far from practical benefits.

Our country faces a complex crisis. Not only semiconductors but even energy cannot be taken for granted. While prices of semiconductors, our main export item, are falling, prices of key imports like energy are fluctuating so rapidly that predicting even a short-term outlook is difficult. This means a country that relies on exports might struggle with structural deficits rather than leveraging semiconductors as a tool.

Since the beginning of his term, President Yoon has vowed to stake everything on semiconductors. He has instructed to nurture talent and create special laws to support companies. However, explanations on how strengthening semiconductors will influence international affairs remain insufficient. It is worth seeking clues to solutions in the Middle East, where geopolitical dynamics changed due to energy hegemony struggles 90 years ago.

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