Seoul to stand up to Bei­jing over chips

The Korea Times - - BUSINESS - By Kim Yoo-chul yckim@ko­re­

The govern­ment has of­fi­cially re­quested China to drop its ap­par­ent “dis­crim­i­na­tory mea­sures” ap­plied to top-tier Korean man­u­fac­tur­ers.

“The govern­ment filed an official re­quest with the Chi­nese trade min­istry to cor­rect dis­crim­i­na­tory mea­sures on Korean man­u­fac­tur­ers, which we be­lieve are truly un­fair, and asked it to en­sure fair mar­ket com­pe­ti­tion to pro­tect the best in­ter­ests of con­sumers and clients,” a se­nior govern­ment official said Thurs­day.

“China has no­ti­fied Korea’s trade min­istry that it will cor­rect any un­fair prac­tices, if found.” The official said the govern­ment will step in to help Sam­sung and SK af­fil­i­ates, both of which op­er­ate mas­sive man­u­fac­tur­ing fa­cil­i­ties in China, be treated un­der a “non-dis­crim­i­na­tory” prin­ci­ple.

Re­gard­ing the time­frame for change, the official said, “China will take pro­ce­dural steps to change its pol­icy and this will take some time.”

China re­cently launched an in­ves­ti­ga­tion into Sam­sung Elec­tron­ics and SK hynix, al­leg­ing they “ar­ti­fi­cially in­flated” mem­ory chip prices that they sell to lead­ing Chi­nese hand­set man­u­fac­tur­ers.

Chi­nese of­fi­cials vis­ited the of­fices of Sam­sung and SK hynix in Bei­jing, though it’s un­known what in­for­ma­tion or doc­u­ments they sought.

The govern­ment official said the two Korean com­pa­nies weren’t in­volved in a price-fix­ing scheme and added the rise in mem­ory chip prices was due to high de­mand and tight sup­ply from in­dus­try con­sol­i­da­tion.

Ear­lier, China im­posed heavy penal­ties on U.S.-based mo­bile chip gi­ant Qual­comm with the lat­ter low­er­ing its roy­al­ties it col­lects from Chi­nese hand­set man­u­fac­tur­ers.

Another govern­ment official said China wants to help the coun­try’s lead­ing hard­ware man­u­fac­tur­ers by ask­ing the Korean pair to widen the scope of patent li­cens­ing.

“China pro­vided Sam­sung and SK with fi­nan­cial and ad­min­is­tra­tive sup­port to help them re­duce in­vest­ment risk, there. The two firms re­sponded by hir­ing more Chi­nese em­ploy­ees at their plants and pay­ing more in­come taxes. Patents are a re­sult of steady in­vest­ment and com­mit­ment for in­no­va­tion, which can only be ne­go­ti­ated on a needs ba­sis” the official said.

Also, LG Chem and Sam­sung SDI, Korea’s top two bat­tery makers, have been strug­gling to gain a foothold in China since 2016, when the trade min­istry there be­gan to drop sub­si­dies for Chi­nese elec­tric ve­hi­cles equipped with their bat­ter­ies.

China said the ban had no re­la­tion to Seoul’s de­ploy­ment of a U.S. mis­sile de­fense sys­tem on the penin­sula. But com­pany of­fi­cials said the mea­sure was taken as part of “un­of­fi­cial sanc­tions” for the de­ploy­ment.

“Korea’s trade min­istry asked China to ad­dress the bat­tery is­sue and we are await­ing the new­est up­dates,” said the official.

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