Following the news that China is concerned at the prospect of South Korea joining a US-led chip alliance;

Josep Bori, Research Director in the Thematic team at GlobalData, a leading data and analytics company, offers his view:

“South Korea is in a tough position, as it will want to balance its exposure to the Chinese market, including its local manufacturing capability, with its exposure to the US market and its significant reliance on US semiconductor manufacturing equipment and design software.

“However, given that China is aggressively working towards developing semiconductor self-sufficiency, the opportunity for South Korea to gain or even retain semiconductor market share in China is likely to diminish over time. As such, GlobalData expects that South Korea will navigate the situation by keeping an equidistant position in the short term, but become more aligned with the US in the long term.

“Given the control that the US, South Korea, Taiwan and Japan exert over the global semiconductor supply chain, it is understandable that China is concerned about the planned Chip 4 alliance. Particularly so with South Korea, as it dominates in areas such as memory, materials, wafer fabrication, and equipment.”

Daniel Clarke, Analyst in the Thematic team at GlobalData, comments:

“China’s reaction to South Korea joining a US-led chip alliance shows just how far away China’s chip self-sufficiency plan really is, and how much it still relies on external partners for much of the value chain.

“China’s chip self-sufficiency plan, if and when it actually materialises, will be bad news for South Korea. Therefore, joining the US-led alliance is a savvy geopolitical move by South Korea because it threatens to delay China’s self-sufficiency plans and sends a strong signal of South Korea’s own power in the semiconductor value chain.”