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[News Analysis] Korea, US reinforce ties on chips, EV batteries to reset supply chains

Including Samsung and SK, Korea’s leading conglomerates to invest total of W44tr in US



 
President Moon Jae-in attends a business roundtable session in Washington on Friday. (Yonhap)
President Moon Jae-in attends a business roundtable session in Washington on Friday. (Yonhap)


South Korea and the United States have agreed to elevate the level of cooperation in major industries, including semiconductors and lithium-ion batteries, to reestablish global supply chains amid growing challenges from China and looming shortages of key components under the COVID-19 pandemic.

The strengthened economic partnership is viewed as a major feat by President Moon Jae-in from his visit to the US for summit talks last week, paving a way to stabilize rocky global supply chains for major industries that support the two economies by letting their companies form close ties with each other.

During a roundtable meeting of Korean and US businesses on Friday, US time, held before a summit between the two state leaders in Washington, four major Korean conglomerates, including Samsung Electronics and SK hynix, announced a package of investments amounting to 44 trillion won ($39.4 billion) in total.

As anticipated, Samsung, the world’s largest memory provider, will inject $17 billion in building a new chip foundry plant in Austin, Texas, according to a plan unveiled during the meeting.

Slated for completion in 2024, the new Samsung foundry fab, which is expected to be equipped with an advanced 5-nanometer chip manufacturing technology process, would increase chip production in the US to prevent a repeat of the chip shortage. 

Samsung has already spent over $17 billion in Texas over the last 20 years. The first fab, initially used for memory chips and then gradually turned to foundry with 14-nm process, was established in 1996. 

The upcoming $17 billion investment marks the single largest project to be carried out in the US.

The Korean tech giant will break ground for the new fab in the third quarter.

SK hynix, another Korean chipmaker, announced its plan to spend $1 billion on building a large-scale research and development center on artificial intelligence and NAND solutions in Silicon Valley.

LG Energy Solution and SK Innovation, Korea’s two battery suppliers, said they plan to invest some $14 billion in separate and joint projects, while Hyundai Motor announced a plan to invest $7.4 billion in expanding electric vehicle production and recharging infrastructure in the US.

Moon, who joined the business meeting held by the US Department of Commerce, said that the two countries are “optimal partners” in securing a stable supply chain, something which he said has become especially important due to the COVID-19 crisis, according to Cheong Wa Dae.

He also voiced confidence in the two countries’ simultaneous growth with strengthened cooperation in the semiconductor, EV and battery industry, noting that amidst the pandemic the vaccine and bio industries offer potential for “great synergy,” Cheong Wa Dae said.

From the US side, American chemicals company DuPont announced it will build an R&D center in South Korea to develop semiconductor materials, including photoresists for extreme ultraviolet lithography.

The Korean government has put an emphasis on cooperation between the two countries’ businesses and the required support from the US government, requesting tax incentives for new investments and information stemming from new demand for chips and batteries in the US.

Kim Jong-hyun, CEO of LG Energy Solution, asked Washington for its “active support” for the battery industry, in addition to the semiconductor industry, citing the need for assistance for core raw material elements.

Moon joined the call, saying that if the US government works to ensure a stable supply of electricity and water needed for manufacturing, more South Korean businesses will invest there.

In response, the US assessed the Korean companies’ investment plans as a way to further develop the two countries’ relations and contribute to restoring their own supply chains.

US Commerce Secretary Gina Raimondo promised to actively support those requests and noted that the Biden administration plans to invest $50 billion in the semiconductor industry and “will not disappoint.”

The roundtable was attended on the Korean side by Minister of Trade, Industry and Energy Moon Sung-wook, SK Group Chairman Chey Tae-won, Samsung Electronics Vice Chairman Kim Ki-nam, LG Energy Solution CEO Kim Jong-hyun and Hyundai Motor Group President Kong Young-woon, among others.

The US side was represented by Commerce Secretary Gina Raimondo, Steve Mollenkopf, CEO of Qualcomm, Steve Kiefer, president of GM’s international operations, Novavax CEO Stanley Erck, DuPont CEO Edward Breen and Ampere Computing CEO Renee James.

By Song Su-hyun & Joint Press Corps (song@heraldcorp.com)





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