US President Joe Biden's first stop during his visit to South Korea was the Samsung Semiconductor plant in Pyeongtaek. This was a symbolic demonstration of the rising international standing of the Korean semiconductor industry. With the growing importance of technological and economic security in national security, attention is growing on how the Korean semiconductor industry, a key player in US friend-shoring, will change following his visit.

A look at President Biden's speech during his recent visit to Korea reveals that "economic security" and "strengthening alliances" were key agenda items. In his speech at Samsung's Pyeongtaek campus, President Biden noted that the Russia-Ukraine conflict has highlighted the importance of supply chains, stating, "We must ensure that our economy and national security are not dependent on countries that do not share our values."

While emphasizing economic security, the wording "countries that do not share our values" is interpreted as an attempt to check not only Russia but also China. The strengthening of the Korea-U.S. semiconductor alliance is expected to have both positive and negative effects on the domestic semiconductor industry, including Samsung.

China's outrage over Korea-US semiconductor alliance On the 21st, President Biden emphasized in his opening remarks at the joint press conference following the South Korea-U.S. summit that “the U.S. economy will grow faster than China’s,” and that “the world’s best semiconductors are being developed through innovation in Korea and the U.S.”

While South Korea's diplomatic strategy has traditionally been a tightrope walk, with the United States as the security partner and China as the economic partner, there is analysis that this visit to South Korea has shifted the focus to strengthening not only military alliances but also economic and technological alliances. The Yoon administration has expressed its intention to participate in the Indo- Pacific Economic Framework (IPEF) and to pursue the establishment of a joint strategy, and has been drawing a line with China by showing a positive attitude toward participation in the Quad in its election pledges and explanatory materials for the recent South Korea-U.S. summit.

Meanwhile, the Global Times, the English edition of China's state-run media outlet Global Times, cited experts as saying, "Such an agreement (made at the South Korea-U.S. summit) could upset the complex and delicate balance in the region and result in disastrous aftereffects that South Korea cannot afford," and "America's anti-China 'Indo-Pacific strategy' has hurt the feelings of its top trading partner."

Some are concerned that if Korea stands at the forefront of the US-China hegemony war, it will face economic retaliation from China, but there are also opinions that it is proceeding as expected. On the 22nd, Chinese Foreign Minister Wang Yi said about the US-led IPEF &lHe emphasized, "We must not harm the stability of the industrial network." While he made a series of statements opposing the IPEF, which aims to encircle China, he did not directly mention South Korea, focusing on and strongly criticizing the US diplomatic strategy of using South Korea to contain China.

China would be severely impacted if excluded from the semiconductor supply chain. China's current semiconductor technology remains at the 14nm level, estimated to be three to four generations behind advanced processes. Its semiconductor self-sufficiency rate is also low. Therefore, Korea is not being criticized harshly, but rather indirectly pressured, because it is a weak link in the Korea-US-Japan-Taiwan chip alliance.

According to the Korea International Trade Association (KITA), South Korea's exports to China last year amounted to $162.9 billion, accounting for 25% of total exports. Semiconductors accounted for approximately 30% of this, worth $50.2 billion. Notably, 39.3% of semiconductor exports are destined for China, indicating a high dependence on semiconductor exports to China. Moreover, according to the Boston Consulting Group (BCG), China accounts for 24% of global semiconductor consumption, right behind the United States at 25%.

Samsung Electronics operates semiconductor production plants in Xi'an and Wuxi, China, and SK Hynix is investing an additional 2 trillion won in its DRAM plant in Wuxi over the next three years, so it is not entirely happy about the strengthening of its coupling with the United States.

Kim Yang-paeng, a senior researcher at the Korea Institute for Industrial Economics and Trade, said in an interview with e4ds, “Amidst the reorganization of the global supply chain, competition is intensifying as each country announces support policies,” and “Korea has maintained neutrality, but this visit to Korea is a starting point for the government to announce its intention to strengthen its coupling with the United States.”

Regarding concerns about economic retaliation from China, Researcher Kim stated, “China has limited room to take action in the semiconductor sector due to its low self-sufficiency rate and technological maturity,” and made a cautious prediction, saying, “There is also the possibility of economic measures in other sectors.” He said, “(When considering profit and loss) China is the largest consumer market in the semiconductor sector, but the introduction of advanced equipment and technological development are more important, so joining hands with the United States will be more beneficial compared to the damage from retaliation from China.”

Opportunity for K-Semiconductor Leap Forward: Samsung "Just Keeps Going" During his visit to Korea, President Biden secured Korea's participation in the International Partnership for Economic Cooperation and Development (IPEF), a key initiative to contain China. This achievement effectively killed two birds with one stone: strengthening the semiconductor supply chain and increasing domestic investment. Some speculate that this strengthened semiconductor alliance could offer Samsung Electronics a golden opportunity to advance the semiconductor industry in the United States.

President Biden visited Samsung Electronics' Pyeongtaek Semiconductor Campus and signed a 3-nanometer semiconductor wafer alongside President Yoon Seok-yeol. In his speech, he stated, "I've seen how the world's most advanced semiconductors are made at this factory. Samsung is one of three leading manufacturers of cutting-edge semiconductors worldwide."

During this visit to Korea, Samsung showcased a prototype of a 3nm semiconductor based on the latest technology, Gate-All-Around (GAA), and achieved maximum advertising effect by imprinting the signatures of the South Korean and US leaders on the wafer. Furthermore, some predict that Samsung's share will increase as the semiconductor supply chain shifts away from being heavily reliant on TSMC, reflecting the traditional U.S. policy of not putting all of its eggs in one basket.

This visit to Samsung's semiconductor plant is drawing attention because Qualcomm CEO Cristiano Amon accompanied President Biden. Qualcomm, a smartphone AP design company and a major Samsung Foundry customer, is accompanying President Biden, raising expectations that Samsung's 3nm process will be entrusted with mass production of Qualcomm's next 3nm AP.

However, Qualcomm CEO Cristiano Amon, who was included on the list of visiting officials and accompanied US President Joe Biden, reportedly did not visit the Samsung plant in Pyeongtaek. While he attended the Korea-US Business Roundtable on the 21st and sat down with Samsung Vice Chairman Lee Jae-yong, it appears he was unable to engage in in-depth discussions.

Meanwhile, Samsung is drawing keen attention to when its groundbreaking ceremony for a large-scale foundry will take place in Taylor, Texas. Last year, Samsung announced plans to invest $17 billion to build a new foundry, and the company has reportedly been actively selecting a site. Rumors are also circulating that the company is preparing a large-scale event to build on the heightened excitement surrounding its upcoming visit to Korea.

An industry insider drew a line, saying, “Samsung has been continuously investing in semiconductors in the U.S. for a long time, and this visit by the U.S. president does not represent a new expansion.” It is also reported that there are no concrete plans yet regarding the expansion of the Austin fab, which is currently floating around.

Meanwhile, the 2022 e4ds Semiconductor Trend Day , hosted by Channel 5 Korea, will be held at COEX on the 10th. In addition to sessions covering the latest trends in GaN, SiC, and automotive semiconductors, a special offline session featuring Professor Hwang Cheol-seong of Seoul National University's Distinguished Professorship on "Next-Generation Memory Development Direction and Material Trends - 3D Stacked DRAM Technology" will be held.

More details can be found on the e4ds news homepage .