[EAI Special Report] The Future of US-China Competition and Korea's Strategy I_② Prospects for US-China Competition and Korea's Response Strategy: The Semiconductor Sector

Editor's Note

In this Special Report, Bae Young-ja, Professor of Political Science and International Relations at Konkuk University, explains the intensifying US-China competition in the semiconductor sector. China is rapidly strengthening its technological innovation in semiconductors with the announcement of 'Made in China 2025.' The author argues that the US is employing various methods to curb the growth of Chinese companies in response to China's semiconductor industry development and technological innovation. Under these circumstances, the author emphasizes the need for careful responses based on Korea's national interests, considering that both the US and China are important partners for Korea.

※ The following is an excerpt. Please refer to the attached file above for the full text.

1. Introduction

At the heart of the US-China trade conflict, which has intensified under the Trump administration, lies advanced technology, particularly semiconductors. As is well known, semiconductors are core components for the physical realization of the so-called Fourth Industrial Revolution, including 5G, cloud computing, the Internet of Things, autonomous vehicles, bio-health, and artificial intelligence. The stable procurement of advanced semiconductors is a critical issue that will determine the success or failure of the Fourth Industrial Revolution. Semiconductors are also key components that determine the performance of various advanced weapons, representing a typical dual-use technology. While semiconductor technology has been developed primarily by private companies driven by commercial needs, governments have also played a crucial role in the industry's development as purchasers and through support for investment and various policy initiatives (Weiss 2014). The United States has led the development of the semiconductor industry since the mid-1950s (Morris 1990, Brown and Linden 2016), while China, through massive investments around the announcement of 'Made in China 2025,' has rapidly strengthened its semiconductor technological innovation and challenged the US (Lewis 2019). In response to China's challenge, the US has sought to curb China's semiconductor technological innovation through various means such as imposing tariffs, restricting trade, and regulating overseas investments. The US's efforts to contain China's semiconductor industry threaten China's technological innovation and are altering the existing global semiconductor value chain, drawing attention to how the semiconductor industry will transform in the future. Amidst these changes, the Chinese government's efforts to enhance its indigenous innovation capabilities (自主创新) in the semiconductor sector are accelerating, and US companies are also exploring various strategies to maintain their dominance in the domestic semiconductor industry. How will the conflict in the semiconductor sector between the US and China continue to unfold? How will the global value chain in the semiconductor sector transform due to the intensification of US-China conflict? How should Korea respond to the US-China semiconductor competition? With these questions in mind, this study aims to summarize the US-China semiconductor conflict to date, forecast its future developments, and explore Korea's response strategies.

■ Author: Bae Young-ja Professor of Political Science and International Relations at Konkuk University. She graduated from Seoul National University with a degree in International Relations and received her Ph.D. in Political Science from the University of North Carolina at Chapel Hill. Her main research areas include international political economy, the political economy of foreign investment, science and technology and international politics, the internet and international politics, and science and technology diplomacy. Her major publications include "Networks and National Strategy" (co-authored, 2015), "North Korea in the World Seen Through Networks" (co-authored, 2015), and "Public Diplomacy of Middle Powers" (edited, 2013).

■ Management and Editing: Baek Jin-kyung EAI Researcher

Inquiries: 02 2277 1683 (ext. 209) j.baek@eai.or.kr

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