Biden Prepares Executive Order to Review Semiconductor, Battery, and Rare Earth Supply Chains Targeting China

CBNC Broadcast Administrative Order Draft Obtained Report
Reviewing Alternatives in Preparation for Conflict with China
Focus on Impact on Korean Battery and Semiconductor Industries

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] U.S. President Joe Biden is reportedly set to issue an executive order directing a review of the overseas dependence on semiconductors, batteries, and rare earth elements. While the core appears to be a response to conflicts with China, the focus is on the related impact since the order concerns semiconductors and batteries, areas where South Korea holds a competitive edge.

On the 18th (local time), CNBC reported this based on a draft executive order prepared by President Biden's economic and national security teams.

The review will be conducted in two phases. First, an analysis and report on a small number of highest-priority supply chains?including semiconductor manufacturing and trade, high-capacity batteries and electric vehicle batteries, rare earth elements, and medical supplies?will be carried out over 100 days. In the second phase, investigations will extend to various sectors, including equipment production in defense, health, energy, and transportation.

One year after the executive order is enacted, the task force will submit recommendations to the president regarding potential measures such as diplomatic agreements and trade route adjustments to prevent monopolization of the supply chains.

Although China is not explicitly mentioned in the executive order, CNBC reported that it is likely an effort to assess how much the U.S. economy and military depend on Chinese exports in critical areas. A representative example includes protective equipment like masks and vaccination syringes, whose dependence on China increased during the COVID-19 pandemic.

CNBC also stated that the list of items under review includes rare earth elements as well as metals used in the production of various advanced technologies such as computer screens, cutting-edge weapons, and electric vehicles. Most rare earth elements are imported from China, which has openly indicated its intention to use rare earths as a weapon in its conflict with the U.S.

Within the U.S., there has been ongoing discussion about the need for domestic production and diversification of supply chains to counter China's weaponization of rare earth elements.

Besides China, the relationship with South Korea is also expected to be affected. Semiconductors and batteries are export items in which South Korea holds a global market advantage, and supply issues have drawn attention.

Due to a shortage of automotive semiconductors, automobile manufacturers worldwide, including in the U.S., are reducing production. The White House has stepped forward to address the shortage of vehicle semiconductors in response to requests from automakers.

The trade secret infringement dispute between LG Energy Solution and SK Innovation has also heightened concerns about battery supply within the U.S.