Amid the deepening conflict between the United States and China over the semiconductor supply chain, the Chinese government has announced that it has agreed to strengthen cooperation with South Korea in the semiconductor supply chain, drawing attention to the details and background.
China’s Ministry of Commerce said on its website that Ahn Deok-geun, head of the trade negotiations department of the Ministry of Trade, Industry and Energy (MOTIE), and Wang Wentao, Chinese Minister of Commerce (Minister), met on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Trade Ministers’ Meeting in Detroit, U.S., to discuss bilateral trade issues.
“The two sides agreed to strengthen dialog and cooperation in the semiconductor industry chain and supply chain,” the Chinese ministry said in a statement.
According to China’s announcement, it is significant that the agreement was reached at a high-level meeting between China and the U.S. in the context of a deepening rift between the two countries over the semiconductor supply chain following the recent sanctions imposed by Chinese authorities on U.S. semiconductor companies.
On Feb. 22, shortly after the conclusion of the U.S.-led Group of Seven (G7) meeting, which adopted a joint communiqué centered on public oversight, China’s Internet Security Review and Adjudication Office (CAC) issued a ban on the purchase of Micron products by major intelligence facilities in China, saying that the security review of Micron products had resulted in a “메이저사이트failed” decision.
Yonhap News Agency
The U.S. reacted strongly and said it would work with key allies and partners to counter the market distortion. Mike Gallagher (R), chairman of the U.S. House of Representatives Special Committee on U.S.-China Strategic Competition, also added to the pressure, saying, “South Korea, an ally that has experienced China’s economic coercion firsthand in recent years, must also act to prevent Micron from filling the void.”
The South Korean government, as well as semiconductor companies such as Samsung Electronics and SK Hynix, are caught between a rock and a hard place.
With semiconductor exports declining and a 14-month trade deficit, the U.S. restrictions on Korean semiconductor companies are a good thing, but the pressure from the U.S. makes it difficult to capitalize on this opportunity. At the same time, it is difficult to reject the supply needs of China, the largest exporter of semiconductors.
In this situation, attention is focused on the details of the ‘Agreement on Strengthening Cooperation in the Semiconductor Supply Chain’ that came out of a high-level meeting between China and Korea. In particular, the first question is whether the agreement includes alternative supply for Korean semiconductor companies due to the Micron sanctions.
However, there is a view that the Chinese side may have exaggerated the details of the agreement in their favor, as the Ministry of Trade, Industry and Energy’s press release on the meeting stated that “Ahn requested the Chinese side’s interest and support in smoothing trade and stabilizing the supply and demand of key raw materials and components,” but did not include the details of the agreement related to semiconductors.
In fact, Vice Minister of Trade, Industry and Energy Jang Young-jin said on the 22nd that “it is not for the government to tell (companies) what to do, but for companies to decide.” He drew the line at any possible government intervention in the matter.