Source: Compiled from ft
South Korean chipmakers are stepping up their lobbying efforts in Washington to counter U.S.-China tensions and win crucial export licenses to supply Chinese companies hit by trade sanctions.
Samsung, Hyundai, SK Group and LG, the country's four largest conglomerates, are leading efforts in the United States as they succumb to pressure from Washington to produce strategically sensitive products such as semiconductors and electric car batteries.
LG will open a lobbying office in Washington next year after its battery-making unit, LG Energy Solution, became embroiled in a multibillion-dollar legal dispute with domestic rival SK Innovation that threatens to derail Ford's electric vehicle plans in the U.S. The company also had to pay General Motors after a costly recall of its electric vehicles due to battery defects.
The South Korean group is seeking export licenses to supply Chinese companies blacklisted by the United States, including technology group Huawei and chipmaker Semiconductor Manufacturing International Corp. The U.S. Commerce Department has granted more than $103 billion in export licenses to Huawei and SMIC from November 9, 2020 to April 2021.
“We are trying to hire Americans with connections in Washington because we need to strengthen our ties with the U.S. government and Capitol Hill,” said an executive at LG Energy Solution.
"Amid deteriorating US-China relations, a changing international trade order and ESG [environmental, social and governance] requirements, we need to respond quickly to the changing global agenda and minimize business risks in global supply chains. We need an effective channel to express our position to Washington," the executive added.
SK Hynix, the world's second-largest memory chipmaker, this month set up an in-house unit to manage its U.S. operations to complete its $9 billion acquisition of Intel's Nand flash memory business.
Analysts said the company is also considering building a wafer fab in the United States, following efforts to upgrade its DRAM plant in Xian, China. The United States has historically opposed the export of advanced equipment to China.
"South Korean chipmakers now have to deal with the Commerce Department and the Pentagon more frequently to discuss security issues. Therefore, they need to hire more former U.S. officials as their lobbyists," said Kim Young-woo, an analyst at SK Securities.
The group's energy unit, SK E&S, will open a New York office in 2022 led by Vice Chairman Yu Jeong-joon, after taking over several U.S. energy companies in recent years.
“From semiconductors to batteries and hydrogen, U.S. interest in Korean companies is growing dramatically," an SK official said. “We will see more executives with overseas business experience moving to the U.S., while the group hires more lobbyists to communicate effectively with Washington."
Samsung Electronics last month named a president-level executive to lead its device solutions business in the United States for the first time. The move comes as the company plans to build a $17 billion chip factory in Tyler, Texas.
South Korea's campaign coincides with efforts by rival regional chipmakers to increase their lobbying influence in the United States.
TSMC, the world’s largest contract chipmaker, has significantly raised its profile in Washington as it builds a $12 billion chip plant in Arizona and competes for $52 billion in chip subsidies announced by President Joe Biden’s administration.
The company hired Nicholas Montella, a former U.S. Chamber of Commerce executive, as director of government relations last year and Peter Cleveland, a former top lobbyist at Intel, as vice president of global policy and legal affairs in 2019.
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