[The Editors' Verdict] How to Survive the US-China Power Struggle

Both Countries Clash with Tech Sanctions and Export Controls
South Korea Faces Direct Hit from Supply Instability and Export Decline
Independent Survival Capabilities and Technological Edge Are Essential

Jo In-kyung, Content Manager of the Industry Division

The fact that SK Hynix's memory semiconductors were used in a new smartphone released by China's Huawei has turned the domestic semiconductor industry upside down. Since 2020, the United States has regulated companies using American technology from supplying products to Huawei. Although LPDDR5 and NAND flash are generic products, and it is unlikely that SK Hynix directly supplied semiconductors to Huawei while ignoring U.S. regulations, it is highly probable that the semiconductors were distributed to Huawei through semiconductor intermediaries or smartphone manufacturers within China. It is already known that as advanced semiconductors became difficult to obtain due to U.S. export sanctions against China, Chinese IT companies secretly began stockpiling semiconductors. Nevertheless, our companies are concerned whether Samsung Electronics' semiconductors might also appear in Chinese products and worry that this incident could trigger unwarranted U.S. sanctions or retaliatory measures.

As trade tensions between the U.S. and China intensify, free trade has become a hollow slogan in the global market. The U.S. is thoroughly blocking the inflow of semiconductor manufacturing technology and advanced equipment targeting China, while China is controlling the export of raw minerals used in next-generation semiconductors such as gallium and germanium. Recently, Chinese chemical fertilizer producers have started limiting the export volume of urea solution. At the same time, Chinese authorities have conspicuously banned the use of Apple's iPhones in public institutions. The global semiconductor technology development and hegemony competition has entered a new phase beyond protectionism, involving checks and counterattacks, and division among nations. Facing China's challenge and countermeasures using resources as weapons, the U.S. is likely to respond with stronger technological sanctions and trade pressure.

South Korea, which heavily depends on China for exports and imports, has been hit directly. There is growing concern that a "second urea solution crisis" like the one two years ago could recur immediately. If the supply chains of key raw materials for semiconductors and batteries become unstable, leading to production disruptions and export deterioration, it will be difficult to expect economic recovery in the second half of this year. If U.S. sanctions against China intensify further, domestic companies will also find it hard to operate their factories in China with confidence.

The best way to escape the influence of the fierce U.S.-China technological hegemony competition is to strengthen the independent survival capabilities of our companies. Through bold investments to secure a super-gap technological edge, we must outpace China’s pursuit not only in semiconductors but also in electric vehicles, IT, batteries, and bio sectors, leading the global market. Securing a stable resource supply chain and diversifying export items and markets to build a fundamental resilience against Chinese variables is essential. The government must also actively intervene to ensure that our companies do not suffer unfair damage due to protectionist measures by the U.S. and China. The U.S., which once led as a defender of free trade, is now aggressively implementing subsidy policies, and we must avoid getting caught in the situation where China openly challenges and provokes the U.S. Amid the rivalry of great powers, we need to respond flexibly to prevent economic issues from escalating into diplomatic problems and seek ways to maximize national interests. As always, markets can change anytime and in any way, and in international relations, there are no permanent enemies or allies.

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