Biden’s US$50 billion for US chip industry puts South Korea on the spot with China

South Korea is expected to be increasingly torn between the United States and China over the issue of microprocessors, as its chip-making powerhouses closely watch Washington’s move to increase domestic chip production in response to a global shortage.

The US still leads the world in chip design, but it has largely ceded the manufacturing of semiconductors - vital to products from smartphones to cars and trucks - to companies in Taiwan, South Korea, Japan and mainland China.

But US President Joe Biden is now looking to provide US$50 billion in funding for semiconductor production and research to address a global shortage that has idled carmakers worldwide and affected producers of other electronic devices and to match China’s own investments into shoring up the semiconductor supply chain. His proposed legislation has bipartisan support from Congress.

Samsung and SK Hynix together control more than two-thirds of the market for memory chips that handle an ever-expanding sea of data, while in Taiwan, Taiwan Semiconductor Manufacturing Company (TSMC) supplies processors that power Apple’s iPhones and Google’s artificial intelligence technology.