[The Worst Semiconductor Winter] Discussions on CHIPS Act 4, US Semiconductor Law, and China's Technological Pursuit: "Many High Mountains to Overcome"

Reality Caught Between the US and China
Experts Offer Mixed Positive and Negative Assessments
Diplomatic Efforts and Workforce Development
Identified as the Most Urgent Policy Priorities

U.S. President Joe Biden is signing the 'Chips and Science Act,' which focuses on intensive investment in the semiconductor industry and research and development, at the South Lawn of the White House on the 9th of last month (local time). Photo by EPA [Image source=Yonhap News]

[Asia Economy Reporter Choi Seoyoon] Experts have offered mixed evaluations?both positive and negative?regarding the impact of the U.S.-led semiconductor alliance ‘Chip4 (Korea, United States, Japan, Taiwan)’ and the U.S. ‘Chips and Science Act,’ which encourages domestic semiconductor production.

As U.S.-China technological hegemony intensifies, opinions among experts are divided over the domestic reality caught between the U.S., which is strengthening its ‘economic alliance’ with allies, and China, the largest export market.

According to a survey conducted on June 5 by the Korea Chamber of Commerce and Industry targeting 30 domestic semiconductor experts, 36.6% responded that the ‘Chip4 discussions’ would have a ‘positive’ impact on the domestic semiconductor industry. However, 46.7% of experts answered ‘negative,’ suggesting that more cautious engagement in the discussions is necessary.

Professor Park Jinseop of Hanyang University’s Department of Convergence Electronics Engineering stated, “Because the semiconductor industry is structured around extensive international division of labor, participation in Chip4 talks is inevitable. While it offers opportunities for research and development (R&D) and supply chain cooperation with global semiconductor companies, concerns about side effects from intensified U.S.-China competition and China’s backlash cannot be ignored.”

Technology is also facing fierce pursuit from China. For example, last week Apple selected China’s YMTC as a new supplier of memory semiconductors, raising concerns within the domestic semiconductor industry. The NAND flash segment that YMTC will supply to Apple is known to have only a 1-2 year technology gap between Korea and China.

Regarding the impact of the ‘U.S. Chips and Science Act,’ 50% of respondents had a ‘positive’ outlook, while 40% viewed it negatively. Only 10% believed it would have ‘little impact.’ Professor Jeong Euiyoung of Yonsei University’s Department of Electrical and Electronic Engineering said, “The Chips and Science Act significantly increases the likelihood of the global semiconductor supply chain rapidly reorganizing around the U.S. Although there are negative factors such as restrictions on Chinese investments due to guardrail provisions, the benefits gained through cooperation with the U.S., which holds technological superiority in semiconductor development and design, are also expected to be substantial.”

As short-term threats to the domestic semiconductor industry, experts expressed concerns in the following order: ▲global semiconductor demand decline ▲China’s COVID-19 lockdowns ▲global interest rate hikes ▲Ukraine war.

For the most urgent policy tasks to advance the semiconductor industry, experts ranked ‘government’s smooth diplomatic efforts including Chip4 response’ (43.3%), ‘human resource development’ (30%), ‘expansion of R&D support’ (13.3%), ‘expansion of tax and financial support for investment’ (10%), and ‘support for stabilizing the supply chain of semiconductor materials’ (3.4%) in that order.

Woo Taehee, Executive Vice Chairman of the Korea Chamber of Commerce and Industry, said, “It is fortunate that the government last week announced the ‘Export Competitiveness Enhancement Strategy,’ promising corporate investment and workforce development in semiconductors amid a decline in semiconductor exports, which account for one-fifth of total exports. However, this is a time when more fundamental efforts are needed to maintain a semiconductor super-gap, including drastic institutional improvements for overseas technology company investments and acquisitions, as well as proactive and sophisticated diplomacy among semiconductor competing countries.”

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