TCSS Security Commentaries #029

Ratcheting tensions in the Korean peninsula and hesitancy to adhere US CHIP 4 alliance highlights South Korea’s diplomatic tightrope walk between US-China strategic competition, domestic tech industries, and North Korea.

Luana Margarete Geiger, Taiwan Fellowship Scholar

President Biden’s administration has been renewing the alliance network in East Asia with the international order in flux and escalating US-China technological competition. On the technological front, Biden launched the US-East Asia Semiconductor Supply Chain Resiliency Working Group, promoted as CHIP 4 – a partnership of global chip powerhouses including South Korea, Japan, and Taiwan. The group is expected to work alongside Washington to strengthen semiconductor supply chain collaboration and coordinate industrial policy. The unsaid strategy is to contain Beijing in the cutting-edge tech sector. South Korea’s heavy reliance on the Chinese tech market positions it as the most hesitant member to join the alliance.

President Biden visits Samsung semiconductor factory in Pyeongtaek, South Korea.
(Source: Reuters)

The emergence of the partnership demonstrates the acute vulnerability to global chip fabrication and high stakes in supply chain management for governments worldwide. CHIP 4 is also in coherence with President Biden’s US$53 billion-strong CHIPS and Science Act 2022, signed into law in August. The act aims to increase semiconductor production in the US and strengthen access to vital chips while curtailing the advancement of Chinese counterparts.

Considering the limitations of unilateral policies, CHIP 4 would emerge as a minilateral to cover all major areas of the value chain more efficiently. Though the Working Group has yet to establish an actionable framework, its purpose is to discuss and coordinate policies on supply chain security, workforce development, R&D, and subsidies. CHIP 4 had its first provisional meeting in September – with talks being accelerated after US House Speaker Nancy Pelosi visited Taipei in August. Significant challenges hinder the alliance’s progress, especially economic interdependence with China and the potential Chinese retaliation with severe consequences for the chip fabs.

South Korea has already experienced consequences of actions perceived as anti-China. In 2016, Beijing’s harsh embargos on South Korean goods and services came as retaliation after Seoul’s decision to deploy US anti-ballistic missile system, enabling it to acquiesce Seoul to constrain military engagement with the US “without firing a shot.” With the US restrictions on China’s access to American technology since 2020, the Chinese growth trajectory has become more reliant on South Korean firms. Also, longstanding Japan-South Korean historical issues and cross-border industry rivalries are detrimental to substantive advancements of the CHIP 4 alliance.

South Korea, therefore, is a more reluctant member. Although Japan and Taiwan face similar economic interdependence with the Chinese economy, the South Korean position is complicated due to the geopolitical situation in the Korean peninsula. The ratcheting tensions, North Korea’s unprecedented missile tests in 2022, and US-Japan-South Korea military exercises in the region indicate that tensions are expected to escalate further, following the stalemate of 2018-2019 summit diplomacy efforts.

Uniquely positioned in Northeast Asian geopolitics, Seoul’s strategic engagement with the US and China has become even more complex due to tensions with North Korea. Without a treaty that formally ends the Korean War – considering the conflict ended in a truce in 1953 – new concerns emerge with each security crisis in the peninsula. This reality makes South Korean relations more dependent on China, which remains North Korea’s main economic partner and one of the main stakeholders in the Korean question. The participation of China in negotiations with Pyongyang is crucial to tangible advances in stabilizing the region.   

The South Korean situation exemplifies how China’s centrality as a major semiconductor market can represent a hurdle to the proposed tech partnership, with manufacturers’ opposition to the government’s controversial stance that may be perceived as anti-Beijing. Biden Administration’s unilateral sanctions on the Chinese tech industry and policies to decouple inform the challenges of complex interdependence in targeting China’s chip capacity. Unilateral actions by the US, however, present limitations and, to become effective, would need the participation of other important players in the global supply chain of semiconductors. With less room for maneuvering and responding to its security ally, South Korea might have to face a turning point in its balancing act between the US and China, with long-term implications for the region.

Luana Margarete Geiger holds a Ph.D. in Political Science from Universidade Federal do Rio Grande do Sul (UFRGS). She is a Research Fellow at the South-American Institute for Policy and Strategy and a Taiwan Fellowship 2022 Scholar.