Batteries, chips strengthen US-Korea economic ties

Battery and chip industries are reinforcing economic cooperation between the United States and South Korea, expanding their ties focused on security to the overall economy.

The two countries share the view that they need to maintain leadership in key sectors through a closer partnership while China, Russia and the European Union (EU) are going for broke to win the battle for supremacy in their core industries.

For the semiconductor sector, the Biden administration is actively pressing Samsung Electronics Co. and SK Hynix Inc. to make direct investment in the US, given the ongoing global chip shortage that repeatedly interrupted production at US automakers, according to the industry on Sept. 27.

The semiconductor segment is also increasingly important for national security since it is an essential strategic component for high-tech weapons such as fighter jets. Thus the US government is boosting its efforts to strengthen semiconductor ties with its conventional allies such as South Korea and Taiwan, home of major global chipmakers.

In line with this, Samsung and SK Hynix have come up with massive investment plans. Samsung is set to pick a site for a foundry plant in the US between Taylor, a city in Williamson County, Texas, and Austin in the state where the company’s current foundry facilities are hosted. It announced a $17 billion investment plan for the US semiconductor sector in May. SK Hynix also plans to spend 1 trillion won ($850 million) in a research and development (R&D) center in Silicon Valley.

But it would be a hurdle to such cooperation if the US government were to force global semiconductor manufacturers to submit internal information in a move to tackle the sustained chip shortage. The US Commerce Department has required chipmakers to disclose information on sales, inventories and clients, which are widely regarded as corporate secrets.

FROM ORIGINAL TECHNOLOGY DEVELOPMENT STAGE

Still, South Korea and the US need to expand cooperation on the industry through joint development of original technologies, experts in Seoul said. The two countries also have to manufacture semiconductor materials, equipment and components since they heavily rely on Europe and Japan in those sectors despite their dominance in the global chip industry with a combined 70% market share, they stressed.

“Korea and the US should carry out joint R&Ds with schools, research centers and related companies from the original technology development stage,” said Ahn Ki-hyun, senior executive director of the Korea Semiconductor Industry Association, in a conference held by the Korea-America Association on Sept. 27.

When chip materials, equipment and components makers start businesses in the other country, the governments should provide these companies with the same support they would their own companies, Ahn said.

ENERGY COOPERATION FOCUSED ON BATTERIES

The two countries are reinforcing their alliance in the energy sector, especially in batteries.

“We are having working-level discussions with the US to hold the Korea-US energy dialogue that has been upgraded to the ministerial level within this year,” said a source at South Korea’s Ministry of Trade, Industry and Energy.

The two countries agreed to upgrade the talk, which had been held as a director-general level meeting since 2009, to achieve mutual policy goals including measures to address climate change during the South Korea-US summit earlier this year.

The energy industry, however, expected the two governments to actively discuss cooperation on secondary batteries since the US is heavily dependent on China for battery materials as it accelerates its supply of electric vehicles.

“The US government is more likely to reinforce cooperation with Korean companies since it wants to cut dependence on China in the battery sector,” said an industry source.

BIO

In addition, the two countries need to expand ties in the bio sector, South Korean industry sources said.

South Korea will be able to seek more cooperation with its US counterparts by providing COVID-19 test kits, said Lee Seung-kyu, vice chairman of the Korea Biotechnology Industry Organization, during the Korea-America Association conference.

“Korea needs to cooperate more with its allies as we import more than 83% of biopharmaceutical raw materials,” Lee said. “We need to expand cooperation with the US on biosimilars and COVID-19 diagnostic kits, areas where Korea has strengths."

The US government is introducing various investment incentives to raise the domestic production of active pharmaceutical ingredients (APIs) used in medicine, including COVID-19 vaccines.

LIKE QUALCOMM

During the conference, Qualcomm Inc. was picked as an exemplary case of economic cooperation between the US and South Korea.

Qualcomm, which was a small and medium-sized company until the 1980s in the US, grew with South Korea through cooperation in the telecommunication sector from the code division multiple access (CDMA) to the development of 5G mobile communication, said The Korea Economic Daily advisor Lee Hak-Young.

“Like Qualcomm, there are many sectors that will be good for companies in both countries through industrial cooperation between Korea and the US,” Lee emphasized. “It is most important to take advantage of this opportunity."

Lee stressed the two nations must work together to dominate global standards for the next-generation industries.

“China is mobilizing not only financial power but also political influence to control international standards for telecommunications, power transmission, and artificial intelligence sectors,” Lee said.

“We need to speed up cooperation in semiconductors, secondary batteries, hydrogen, renewable energy, and carbon capture and storage industries."

Write to Sin-Young Park at nyusos@hankyung.com
Jongwoo Cheon edited this article.