Why is China so concerned at the prospect of South Korea joining a US-led chip alliance?
- The so-called Chip 4 Alliance is seen by Beijing as Washington’s plot to exclude China from semiconductor value chains
- China is concerned that a decision by South Korea to join US-initiated chip alliance would harm its semiconductor self-sufficiency drive
A US-initiated chip alliance with Asian economies, especially South Korea, is facing criticism from China, which is concerned about losing critical supplies as it seeks to build greater self-sufficiency in semiconductors, according to analysts and media reports.
The so-called Chip 4 Alliance, a partnership envisioned by the US to include South Korea, Japan and Taiwan, is seen by Beijing as Washington’s plot to exclude China from semiconductor value chains, with both China’s foreign ministry and commerce ministry expressing opposition to the idea.
China is particularly sensitive about the position of South Korea as the country is key to Beijing’s semiconductor self-sufficiency drive. Samsung Electronics and SK Hynix both have plants in China, helping the country to integrate into cross-border value chains.
Amid Washington’s efforts to publicly press Seoul into joining the chip coalition, China has stepped up its rhetoric against such a move.
“South Korea should not blindly follow the US and the West in making its China policy”, according to an editorial published this week by nationalist tabloid Global Times. It added that China should not be blamed if it takes “countermeasures against South Korea” if the country chooses to side with Washington.
The article echoed comments by China’s foreign ministry spokesman Zhao Lijian that China opposes the idea of “weaponising” the chip supply issue, as he urged South Korea to consider its long-term interests.
China is South Korea’s biggest trade partner and of South Korea’s US$69 billion memory chip exports in 2021, exports to China accounted for 48 per cent, data from the Korea International Trade Association shows.
“Decoupling from such a large market is akin to commercial suicide,” according to the Global Times editorial.
Beijing’s strong reaction to the notion of Seoul joining Chip 4 stems from strategic concerns about its semiconductor self-sufficiency drive, said Kim Yang-paeng, senior researcher at the Korea Institute for Industrial Economics and Trade.
“From China’s point of view, Korea is not only a semiconductor supplier, but also a country where semiconductor manufacturing technology can be transferred in the long term,” Kim said.
If South Korea sides with the US, cooperation in semiconductor technology between Korea and China is set to become more difficult, Kim said.