[Exclusive] Government Begins Full Review of 'Chip4'... Holds Private Vice Minister-Level Meeting

Government Holds Closed Deputy Minister-Level Meeting to Discuss 'Chip4'
US-Led Semiconductor Alliance Includes Japan, Taiwan, etc.
Concerns Over China's Backlash... Korea Accounts for 40% of Semiconductor Exports
Participation Decision to Be Finalized by Next Month... Government Faces 'Dilemma'

US and South Korean Leaders Inspect Samsung Electronics Semiconductor Plant
(Pyeongtaek=Yonhap News) Reporter Jeong Won Ahn = U.S. President Joe Biden, visiting South Korea for the first time since his inauguration, toured the Samsung Electronics semiconductor plant in Pyeongtaek, Gyeonggi Province, on the afternoon of May 20, along with South Korean President Yoon Suk-yeol. From the left are U.S. Secretary of Commerce Gina Raimondo, President Biden, and President Yoon Suk-yeol. The second from the right is Samsung Electronics Vice Chairman Lee Jae-yong.
jeong@yna.co.kr
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＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

[Asia Economy Sejong=Reporter Lee Jun-hyung] The government has held a non-public vice ministerial meeting to begin seriously considering participation in the US-led semiconductor alliance ‘Chip4’. This is because the US requested the Korean government to confirm its participation ahead of the first Chip4 working-level meeting scheduled for the end of next month. Since the Chip4 alliance excludes China, it could directly lead to trade friction between Korea and China, deepening the government's concerns.

According to a compilation of reports on the 19th, the government will hold a non-public vice ministerial meeting at the Government Complex Seoul in the afternoon to discuss joining Chip4. Vice ministers from related ministries such as the Ministry of Foreign Affairs, Ministry of Economy and Finance, and Ministry of Trade, Industry and Energy are expected to attend the meeting. A government official said, "The review of joining Chip4 is now entering a full-fledged stage," adding, "Vice ministerial meetings of related ministries will likely be held several times for the time being."

Chip4, which has a strong intention to check China, refers to semiconductors (chips) and the number of allied countries (4). Earlier, the US proposed the formation of the Chip4 alliance to three countries?Korea, Japan, and Taiwan?in March. The plan is to build a supply chain coalition with allied countries that have strengths in various fields such as design, foundry (contract manufacturing), and materials, parts, and equipment (MPE) to counter China’s ‘semiconductor rise.’

President Yoon Seok-yeol Examining a Photomask
(Seoul=Yonhap News) President Yoon Seok-yeol is looking at a semiconductor photomask received from Minister Lee Jong-ho of the Ministry of Science and ICT during a Cabinet meeting held at the Yongsan Presidential Office building in Seoul on June 7, 2022. 2022.6.7 [Provided by the Presidential Office. Resale and DB prohibited]
Photo by jeong@yna.co.kr
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The problem is that if joining Chip4 leads to friction with China, the semiconductor industry, which drives the Korean economy, could be shaken. China accounted for about 40% of Korea’s semiconductor exports last year. Including Hong Kong, the share reaches 60%. On the 18th, China warned through the Communist Party’s official newspaper, "It is uncertain what answer Korea will give regarding joining Chip4 under US political pressure," adding, "(However) if Korea succumbs to US pressure, it is clear that the disadvantages outweigh the advantages." The inclusion of Taiwan, which China does not recognize as a country, in Chip4 also adds to the government’s concerns.

The US ultimately set a ‘deadline.’ Unlike Japan and Taiwan, which have already expressed positive stances toward Chip4, Korea has yet to respond. Accordingly, the US recently informed the Korean government of plans to hold the first Chip4 working-level meeting at the end of next month. Considering that the schedule was not coordinated with Korea in advance, the US is effectively demanding a definitive answer regarding Chip4.

There is also analysis that Korea’s participation in Chip4 will be inevitable amid the global supply chain restructuring. The Korea Institute for Industrial Economics and Trade (KIET) stated in a recent report, "After the semiconductor supply chain restructuring, maintaining ambiguous neutrality will become difficult," adding, "The US holds many semiconductor core technologies and can influence foreign semiconductor production through its own technology controls, so countries not participating in the semiconductor alliance may, in the worst case, be unable to produce semiconductors."