Crisis Over Semiconductors Surfaces During Yellen’s Visit to Seoul

SEOUL — Rivalry between America and Communist China isn’t just about the latter’s growing military power all around its periphery from North Korea to the South China Sea to Pakistan and beyond. It’s also about America’s crying need for semiconductors, and South Korea, one of America’s foremost allies, is caught in the middle.The problem surfaced during the American treasury secretary’s visit here this week, when Janet Yellen met South Korea’s pro-American president, Yoon Suk-yeol, the country’s top finance officials, and the science minister, Lee Jong-ho, who is responsible for information and communication technology.Rather than agree to an alliance on chips that would also include Japan and Taiwan, the world’s largest producers of semiconductors, Mr. Lee urged caution. He clearly was not taken in by what President Biden and Ms. Yellen have called “friend-shoring” — a term, derived from off-shoring, or sending production overseas, that connotes friends working together, maybe even “insuring” friendship.The U.S, optimistically has given the proposed alliance a catchy name (or two) — Chip 4 or Fab 4. Get it? That’s a play on the words “fabulous” and “fabrication.” Trouble is, South Korea is hesitant to be the fourth party despite American entreaties.The onus, after Ms. Yellen’s two-day visit here, falls on the newly installed American ambassador to Korea, Philip Goldberg, to persist in patiently negotiating while worrying about joint military exercises with the South Koreans and how to react to North Korean missile tests or even a seventh nuclear test.The Americans are still counting on South Korea, as such a great alliance partner, to play an all-important role in bonding against disruption of the supply chain. Why else did Mr. Biden make such a point, during his visit here in May, of visiting a huge Samsung semiconductor plant first thing after getting off the plane?Close friendship between Washington and Seoul — the Americans like to say there’s “no daylight between us” — only goes so far. The South Koreans are wary of offending Communist China, their biggest trading partner and a vital source of all that goes into so many gadgets.“The U.S. proposal puts South Korea in a delicate balancing act between its long-standing ally and its largest trading partner, China,” South Korea’s national news agency Yonhap said, considering that China “also supplies many of the raw materials needed in chips, batteries and other key export items.”Mr. Lee’s call for careful evaluation of the American proposal appeared as a super-polite way of saying South Korea was, frankly, none too enthralled by the whole idea for fear of offending China, with which the South is embroiled in tendentious military issues.China has objected strenuously, for instance, to South Korea’s acceptance of an American army unit of missiles for “Terminal High-Altitude Area Defense.” The Americans insist they’re only to shoot down high-flying, hypersonic North Korean missiles. The Chinese, though, say the missiles, on a golf course 125 miles south of Seoul, are also anti-Chinese, and they’ve punished the South Koreans by curtailing South Korean trade and investment and decreasing the hordes of Chinese tourists who used to descend en masse on Seoul and the tourist island of Jeju.Meanwhile, time is running short for persuading South Korea to make the Fab 4 live up to the number in the name.The Yoon administration is expected to decide by the end of August on whether to become the fourth in the Fab 4. The decision, Mr. Lee said, rests on “Korea’s national interest” and “what will help us.”Chris Park, in a blog post at the Council on Foreign Relations in New York, said a semiconductor alliance with South Korea “needs to be preceded by clear communications, improved transparency and greater interdependence to foster trust and manage alliance relations.”Having made her pitch behind the scenes for South Korean cooperation, Ms. Yellen addressed the issue publicly in a visit to LG Sciencepark, a vast R&D facility under the aegis of LG Chemical.“By deepening our economic ties and making our supply chains more resilient, we’re seeking to resolve the sort of bottlenecks that are raising prices for consumers in both of our countries,” she said. “Global shortages across supply chains are raising prices” and “fueling the inflation that Americans are feeling in their day-to-day life.”Dramatically, Ms. Yellen broadened the message, accusing Russia of “threatening to spark a global food crisis by blocking ports in Ukraine” and calling on “all responsible countries” to “unite” against “Putin’s war of aggression.”All the more reason, she made clear, for recognizing “friend shoring” as “an important element of strengthening economic resilience.”

Crisis Over Semiconductors Surfaces During Yellen’s Visit to Seoul

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