Chip 4 deadline from U.S. rattles a Korea still on the fence

President Yoon Suk-yeol, second from left, and U.S. President Joe Biden, far left, tours a Samsung Electronics chip complex in Pyeongtaek, Gyeonggi on May 20. [JOINT PRESS CORPS]

Korea is stuck between China and the United States when it comes to chips, and sitting on the fence is becoming more difficult by the day.

Washington gave Seoul an end-of-August deadline, according to local media reports, to join a semiconductor alliance with the United States, Japan and Taiwan. In the alliance, which has become known as Chip 4 in Korea, the countries will share plans for chip investment, production and supply-chain management.

The government continues to hem and haw.

Science and ICT Minister Lee Jong-ho argues Korea must put national interest first in deciding the issue.

"We need to make a decision sternly in a way that benefits the country," he said, emphasizing "a cautious approach."

The Yoon government hasn't been clear about its stance yet, with a presidential office spokesperson saying last week that it "is using various channels to strengthen cooperation with the U.S. in semiconductors."

Yang Hyang-ja, the head of a parliamentary committee on semiconductors, spoke in favor of the proposed alliance.

"If Korea is being indecisive on the matter of the tech alliance with the United States, the country will face significant challenges in both national security and foreign affairs," said Yang, a Samsung Electronics executive-turned-lawmaker.

Yang stressed the strength of the United States in the semiconductor field as the country is home to companies holding key intellectual property for chip design, software and equipment.

"If you take a look at the semiconductor landscape, the United States is like a landlord and the rest of the countries — Korea, China, Japan, EU and Taiwan — are tenants," she said.

The U.S. Chips Act, which was passed in a procedural vote in the U.S. Senate on Tuesday, will subject chipmakers to a ban on investment in China for certain types of chips.

Details of the alliance remain murky and the consequence of not joining not at all clear. The cost of joining in terms of lost business with China has not been quantified, though the rhetoric suggests that a price would be paid by Korea.

China is the biggest importer of chips made by Korean companies like Samsung Electronics and SK hynix. The country took 59.7 percent of Korea's chip exports last year.

"We hope relevant parties will uphold objective and fair positions, bear in mind their own long-term interests and the principle of a fair and just market, and do more to ensure the stability of the global chip industrial chain and supply chain," Chinese Foreign Ministry spokesperson Zhao Lijian said during a press briefing on Tuesday, when asked about U.S.-led push to form the chip alliance.

"Once China, the biggest market in the industry, begins to lose trust in the South Korean supply chain in the industry, South Korean semiconductor suppliers' Chinese market share will take an immediate hit," said the Global Times, an English-language newspaper largely controlled by China's Communist Party.

Samsung Electronics runs memory chip plants in Xian, while SK hynix operates a dynamic random access memory (DRAM) plant in Wuxi.

The companies declined to comment about the forming of the alliance.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]