United States Needs to be More Prudent and Flexible

U.S. President Joe Biden at a White House meeting in April with semiconductor industry CEOs

“Let’s assume that the South Korean government demands Intel’s technological data and client information. Is there any possibility that the U.S. government will accept it?” said an employee in a Korean semiconductor company.

Since the beginning of this year, the White House has had three meetings related to the semiconductor industry. At the first two, it focused on self-reliance in terms of production and supply for a decrease in its reliance on China. At the third on Sep. 23, however, the United States demanded global semiconductor companies’sensitive and confidential information and data, claiming that data and information sharing is required to deal with the ongoing global chip shortage. U.S. Secretary of Commerce Gina Raimondo even said that the Defense Production Act of 1950 would be invoked if the companies refused to submit the data and information.

The data and information include sales, order and inventory details, process technology and production data, client and business information, and so on and the deadline of the submission is Nov. 8. In other words, the U.S. government is demanding almost every internal data and information of major semiconductor companies. Although the U.S. government said that those would never be exposed, the promise may not be kept with the U.S.-China rivalry continuing to intensify. The U.S. government is currently providing huge subsidies for U.S. semiconductor companies in order to increase semiconductor production in the United States and there is no guarantee that the data and information will not end up in the hands of those companies including Intel, Micron Technology and Apple.

Exposure of such data and information including costs, selling prices and yields will affect global semiconductor prices, and then the bargaining power and sales of South Korean companies such as Samsung Electronics and SK Hynix cannot but decline. Besides, client information leakage will result in international litigation regarding their non-disclosure agreements.

The current situation requires government intervention. However, special laws for semiconductor companies are yet to be enacted in South Korea unlike in the United States and China.

Lawmakers are criticizing the government for its insufficient response. “What on earth is the role of the government?” said Transition Korea lawmaker Cho Jung-hun, adding, “Samsung Electronics and SK Hynix are being threatened, and yet the government is not protecting them.”

It is certain that the U.S.-China rivalry in the global semiconductor industry will continue for long. The South Korean government needs to clarify its stance in order to endure pressure from both. Both the U.S.-South Korea alliance and the strategic partnership between South Korea and China are important indeed, but the current issue is one that has to do with economic sovereignty. No matter how important the United States is as an ally, it cannot cross the line as to the key interests of South Korea and its enterprises. The U.S. government needs to be aware of the fact that its excessive demand is undermining the mutual trust and is of no help at all for the value alliance it is pursuing.