Source: Compiled from Koreatimes
South Korea is expected to defend the interests of the country's two largest chipmakers - Samsung Electronics and SK Hynix - as the top trade negotiator formally expressed his "serious concerns" about the Biden administration's move to implement the Defense Production Act (DPA).On Wednesday, South Korea's Ministry of Trade, Industry and Energy issued a rare statement expressing South Korea's concerns about Washington's demand that South Korean chipmakers operating in the United States disclose confidential information related to the supply chain.
"The U.S. request is wide-ranging, including sharing of commercial secrets, which is a point of concern from Korea's standpoint," South Korean Trade Minister Yang Han-koo was quoted as saying in the ministry's statement. His message was forwarded to U.S. Trade Representative Katherine Tai during the OECD Council meeting in Paris.
Semiconductors and batteries have become central to national security interests amid years of automotive chip shortages. Washington is expected to invoke a Cold War-era national security law to force semiconductor companies to share sensitive information. U.S. Commerce Secretary Gina Raimondo recently confirmed that the DPA would apply if companies failed to share more details about supply shortages and stockpiling.
However, sharing any information related to the supply chain, such as planned production targets or inventory levels, is too much to ask of chipmakers because this data is directly linked to customers. Samsung and TSMC have never chosen to reveal the names of their customers, but Samsung is said to have been supplying automotive chips and LED headlights to Tesla.
In addition, from the perspective of Apple and Tesla, since they require their chip procurement partners to provide different types of chips based on unique price matrices and different specifications, sharing relevant data may lead to a weakening of the bargaining power of Korean chipmakers in price negotiations.
But despite Yang’s request, Tai did not mention any specific plans, only reiterating Washington’s ongoing position on the matter, saying the request was aimed at addressing the mismatch between semiconductor supply and demand. Tai added that she would convey South Korea’s concerns to relevant U.S. government agencies.
During South Korea's National Assembly's annual audit of the ministry this year, Trade, Industry and Energy Minister Moon Sung-wook said he considered Washington's request "rare" and stressed that the ministry would actively intervene in the issue with the U.S. government to protect the best interests of South Korean companies.
The United States issued a "voluntary" questionnaire, giving companies 45 days to provide information. Samsung and SK were urged to answer 14 questions on sensitive issues, including their planned production (memory chips and foundry chips), inventory numbers, customer names, and management plans and target revenues.
Samsung and SK do not rule out the possibility that providing such details would give Intel and U.S. chipmakers the upper hand, a request that could come as Washington supports Intel's moves to strengthen its foundry-related portfolio, the sources said.
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