US-South Korea summit: Taiwan, semiconductors on agenda between Joe Biden and Yoon Suk-yeol

‘Very robust discussion’ on fraught topics expected for second state visit hosted by Biden administration and first involving an Indo-Pacific leader
Washington seeks ‘a more secure global telecommunications ecosystem and a more resilient supply chain for semiconductors’, says spokesman

US-China relations

Orange Wangin Washington

Published: 5:50am, 25 Apr 2023

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Semiconductor supplies and Taiwan Strait tensions will feature on the agenda of the US-South Korea summit this week, the White House said, amid rising apprehensions on the two fronts between Beijing and Washington.

South Korean President Yoon Suk-yeol arrived in Washington on Monday for a week-long official visit. It marked the second state visit by a foreign leader to the US since President Joe Biden took office in early 2021 and the first state visit by an Indo-Pacific leader during his administration.

The two allies were expected to have a “very robust discussion” on the chips sector over the course of the week, National Security Council spokesman John Kirby told a press conference on Monday.

“We look forward to working with our partners and allies, including and especially [South Korea], and building a more secure global telecommunications ecosystem and a more resilient supply chain for semiconductors,” Kirby said.

The comment came after a report by the Financial Times on Sunday claimed the US asked Seoul to urge its major chip makers – Samsung Electronics and SK Hynix – not to increase sales to China if Beijing banned Micron from selling chips following a cybersecurity review of the American company’s products.

Kirby did not confirm the report while stressing that South Korean firms were investing in the US and stood to benefit significantly from America’s Inflation Reduction Act and tax incentives under the Chips and Science Act.

The US Commerce Department in March unveiled its proposed “national security guardrails” for the Chips Act, which bar companies receiving a portion of the US$52 billion in federal subsidies under the project from using the funds for projects in “foreign countries of concern” – specifically, mainland China, Russia, Iran and North Korea.

The new guidelines classify a list of semiconductors as critical to national security and prohibit funding recipients from adding new production lines or expanding an existing legacy facility’s production capacity beyond 10 per cent.

As a result, analysts have argued that some of the world’s leading chip makers, including Samsung, will be hamstrung in expanding their facilities in China.

US-China ties set for further ‘turbulence’, former Chinese envoy warns

Last month Yoon during a meeting with US Trade Representative Katherine Tai asked Washington to address the South Korean chip makers’ concerns over the Chips Act citing the major concessions asked of them, such as submitting data on their cash flows and profitability in exchange for receiving subsidies.

South Korea is a powerhouse in the global semiconductor industry, with major companies like Samsung and SK Hynix positioning the nation as a crucial player in both the memory and processing chip markets.

Seoul also forms part of the US-led Chip A alliance, along with Taiwan and Japan.

When asked about the Financial Times report, Beijing criticised Washington for pushing “decoupling and severing supply chains and even coerced its allies to join the campaign to contain China” via chips export controls.

“This is typical bullying in the field of technology and trade protectionism,” Chinese foreign ministry spokeswoman Mao Ning said at a press conference on Monday.

Chinese foreign ministry spokeswoman Mao Ning gestures during a media briefing in Beijing on Monday. Photo: AP

US Treasury Secretary Janet Yellen said last week that the Biden administration had no intention of using “narrowly targeted” national security tools like export controls and entity lists to stifle China’s rise.

Tensions in the Indo-Pacific region would rank high on the agenda during the talks between Biden and Yoon, including those coming “from an aggressive and coercing set of behaviours by China, particularly in the South China Sea but also across the Taiwan Strait”, Kirby said on Monday.

Biden would make clear during the summit with Yoon that “there’s no reason for these tensions to devolve in any kind of conflict”, he added.

“President Yoon can expect that President Biden’s approach to cross-strait tensions will be very, very consistent,” Kirby said.

Kirby made the comments when asked about Yoon’s recent remarks on Taiwan before his US trip.

South Korea hits back at China’s ‘rude’ retort in war of words over Taiwan

The South Korean president equated the issue of Taiwan to the South and North Korea issue, arguing it was a “global issue” that was not simply between Beijing and Taipei. Yoon said increased tensions in the Taiwan Strait were caused by attempts to change the status quo by force and that he opposed such a change.

Chinese vice-foreign minister Sun Weidong on Thursday summoned Seoul’s envoy to lodge “solemn representations” over Yoon’s remarks, calling them “erroneous” and “totally unacceptable”, according to the ministry’s statement on Sunday.

Biden and Yoon are expected on Wednesday to reveal major deliverables on extended deterrence against North Korea as Pyongyang continues to develop its nuclear and missile capabilities, according to the White House.

Meanwhile, the Treasury Department on Monday announced sanctions on three people in China it said were involved in laundering virtual currency stolen by North Korean hackers to help finance Pyongyang’s weapons programmes.

When asked whether the US would welcome a decision by South Korea to send arms to Ukraine, Kirby said: “We welcome any contribution by any nation to support Ukraine, whatever that is.”