U.S. Measures for Industrial Hegemony May Adversely Affect South Korea

U.S. President Joe Biden

The Korea Institute for Industrial Economics and Trade said in its report on March 25 that U.S. President Joe Biden’s recent executive order related to semiconductor and EV battery supply chains is based on the United States’ long-term national strategy to lead high-tech manufacturing industries and keep China in check.

“The semiconductor industry of South Korea may be substantially affected down the road depending on the scope and intensity of relevant measures of the United States,” it explained, adding, “South Korean semiconductor manufacturers such as Samsung Electronics and SK Hynix may be affected in the process in which the United States leads the reorganization of global supply and value chains in those industries.”

“One of the most probable scenarios is that the United States will cause non-U.S. companies with advanced process technologies in the memory and non-memory sectors to build production facilities in the United States for its value chain refinement,” it went on to say, continuing, “In the memory chip industry, where South Korea’s global market share is exceptionally high, the United States is likely to take the overwhelming market share as a risk factor and try to reduce the lopsidedness.”

It also mentioned that the Joe Biden administration may work more closely with Japan in order to diversify its supply sources from South Korea and Taiwan and, although the possibility is low, it may impose sanctions on the Asian supply chain constituents on which it is dependent.

“Once the United States’ reorganization attempt becomes a reality, the semiconductor industry of South Korea will face another challenge in terms of global status and influence,” the institute said, advising, “We need to closely analyze the supply chain structure of the industry, how it is linked to China in particular, and prepare responses to potential U.S. scenarios.”