"Concerns Over China's Retaliation and International Conflicts Hinder US-Led CHIPS Act... South Korea 'Most Hesitant'"

President Joe Biden of the United States [Photo by AP]

[Asia Economy Reporter Jeong Hyunjin] The semiconductor supply chain alliance led by the United States, involving South Korea, Japan, and Taiwan, known as the 'Chip4' alliance, is facing difficulties, the UK Financial Times (FT) reported on the 12th (local time). It pointed out that due to concerns over China's retaliatory measures and deteriorating relations between South Korea and Japan, the preliminary meeting has yet to be held.

Major foreign media reported that although it has been a year since the US announced the Chip4 alliance to counter China, such a situation has arisen. The Biden administration initially planned to receive confirmations from participating countries by the end of last month and hold a preliminary meeting to discuss specific cooperation measures. However, as countries have shown reluctance, the schedule for the preliminary meeting has been delayed.

Sujai Shivakumar, a senior researcher at the Center for Strategic and International Studies (CSIS), told foreign media, "An alliance is necessary for the US to strengthen the supply chain and allow room to restructure the industrial base in this sector," adding that Chip4 was also established to partially slow down China's semiconductor development.

The foreign media evaluated that fear of China's retaliation makes building Chip4 difficult. Given that China accounts for 40% of global IT production and is a major supplier of key components and materials, South Korea, home to Samsung Electronics and SK Hynix leading the memory semiconductor industry; Taiwan, home to TSMC, the world's number one foundry (semiconductor contract manufacturing) company; and Japan, with numerous semiconductor materials, parts, and equipment companies, cannot easily join Chip4. It was also reported that Japan and South Korea hesitate to be part of a government-level group that officially includes Taiwan, due to concerns about China.

The foreign media particularly described South Korea as the most hesitant country among the Chip4 participating allies, citing a US government official who expressed concerns that Chip4 could affect competition among major semiconductor companies. The fierce competition between Samsung Electronics and TSMC over advanced processes in the foundry market was mentioned as a representative example. The media also reported, "Some in South Korea fear that the US might use this to give Intel and Micron a competitive advantage."

Regarding the Japanese government, the foreign media reported that Japan expressed the view that if South Korea joins Chip4, the scope of the alliance should be limited considering the ongoing dispute between South Korea and Japan following Japan's strengthened semiconductor material export regulations in 2019. Sanae Takaichi, Japan's Minister of Economy, Trade and Industry, emphasized that Japan is working with the US and other countries to strengthen the semiconductor supply chain, but stressed, "Efforts on economic security should not hinder industrial activities or harm innovation or efficiency."

The foreign media cited a senior South Korean government official saying that apart from attending the upcoming preliminary meeting, no other commitments have been made. However, a US government official told the foreign media, "They (South Korea) do not want to be excluded, and frankly, it is difficult to move forward without them," indicating that South Korea has effectively decided to join the alliance.

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