Global chip battle

Korea should beep up semiconductor industry

U.S. President Joe Biden has stressed the importance of the semiconductor industry and pledged to make huge investments in the area. During a virtual meeting hosted by the White House, Monday, Biden said, “We’re investing aggressively in areas like semiconductors and batteries; that is what they’re doing and others, so must we.”

The meeting was attended by CEOs of major companies like Samsung Electronics, Taiwan Semiconductor Manufacturing Company (TSMC), Intel, General Motors and Ford. Biden, apparently aware of the rise of China in the chip making industry, said, “I’ve been saying for some time now — China and the rest of the world is not waiting, and there’s no reason why Americans should wait.”

Holding up a silicon wafer, he underlined the significance of the infrastructure industries including electric vehicle (EV) batteries and 5G communications. Fresh from the meeting, Intel CEO Pat Gelsinger said the company’s goal is to start production of automotive semiconductors within six to nine months.

The White House convened the meeting to cope with the stalled production of vehicles in the United States due to the shortage of semiconductors. Yet the Biden administration appears to be attempting to create a semiconductor alliance comprising major enterprises of its allies and partners with the goal of keeping the upper hand over China in the strategically important chip sector.

This means the Biden administration is eager to fortify its grip on the sector for the sake of beefing up national security.

Semiconductors have already become essential to national security beyond their industrial value. The growing tensions between the U.S. and China have put domestic chipmakers like Samsung Electrics and SK hynix in an increasingly difficult position. Samsung, which is operating a plant in Austin, Texas, has been pressed to make further investments in the U.S. However it found it hard to comply with the U.S. request on fear that its factory operation in China might be negatively affected by the growing Sino-U.S. rivalry in not only geopolitics but also trade and technology. China is South Korea’s largest trading partner, while the U.S. is its traditional security ally.

Semiconductors are a key industry for Korea, accounting for 20 percent of the country’s entire exports. The only way to cope with the growing challenges is for Korean companies to maintain a competitive edge over their global rivals by expanding investments, nurturing human resources and strengthening research and development. The government should push for deregulation and innovation, promote entrepreneurship and engage in proactive trade diplomacy. It should also step up cooperation with the business sector to ease the semiconductor shortage and hone the global competitiveness of the country’s chip making industry.