The US is also building a chip alliance with Japan and South Korea

In Japan, it is also expected that Biden and Kishida will reach a concrete framework agreement on how both countries can guarantee the supply of semiconductors in international crises and how they can work together more closely on other issues of economic security. In view of China’s more aggressive approach, both countries are concerned about their dependence on chip strongholds such as Taiwan, which the People’s Republic is threatening to forcefully unify. On Tuesday, the topic itself could be discussed at the summit of the “Quad” – a loose coalition of the US, Japan, Australia and India.

The push in the matter of semiconductor supply is currently being reinforced in the USA by domestic politics. Biden’s predecessor Donald Trump had already put the settlement of key industries in the USA on the agenda, and Biden accelerated it. The high inflation in the US, recently more than eight percent, is increasing the pressure. Because the price surges are not only to blame for the high energy prices, but also for the lack of many components, especially semiconductors and batteries.

For US Secretary of Commerce Gina Raimondo, this isn’t just an economic issue. “The semiconductor crisis is a matter of national and economic security,” she tweeted. “Demand is still going through the roof, and chip supply hasn’t caught up yet.” She promoted a proposed innovation bill that would bring more semiconductor fabs to the United States.

The US wants to make South Korea and Japan technology partners

The USA chose its allies Japan and South Korea as partners, both of which have a strong chip industry. South Korea wants to expand its world market leadership in memory chips to other segments. Japan’s chip industry has lost market share. However, without production facilities, components and chemicals from Asia’s oldest industrial nation, factories in Taiwan and South Korea would not be able to produce.

When it comes to car batteries, it’s also Japanese and South Korean companies that have so far successfully defied China’s efforts to expand. The corporations also want to manufacture more in the USA. Japan’s technology group Panasonic, for example, wants to produce car batteries with the electric car manufacturer Tesla. South Korea’s battery and chip companies are now investing tens of billions of dollars in the USA. Samsung alone is building a chip factory in the USA for 17 billion dollars.

For Tobias Harris, East Asia expert at the progressive think tank Center for American Progress, it’s no longer just about investing in the US – a trend known as “onshoring”. “In Washington, the word ‘friendshoring’, meaning the production of critical goods in friendly countries, is now as important as ‘onshoring’.”

The reason is the same as that for globalization: By better integrating cross-border supply chains, the US can build chips more cheaply and efficiently than would be possible with a purely national solution – but only with trusted partners.

The fear of the central powers in the great power conflict

South Korean expert Lee Shin Wha, a professor at Korea University in Seoul, explains: “The trade dispute has evolved into a serious competition for hegemony between the US and China, covering not only politics, security, culture and technology, but also extends to systemic ideological competition.”

This development presents the Asian Central Powers with a dilemma. Both countries need their alliances with the US to deter China and North Korea. At the same time, the prospect of having to choose between the USA and the Middle Kingdom in the great power conflict threatens the economic foundations of both nations.
They could lose the important Chinese market as a result of US sanctions, and the American market as a result of protectionist industrial policies. The neighbors’ feeling of crisis is even greater than that in Germany. Because Japan and South Korea do not have an EU as a partner, but are on their own.

South Korea’s strategy is similar to that of Japan. “We must clearly state our position as a key ally,” Lee said. At the same time, it is necessary at the global level to “secure a certain strategic influence on the major powers” through multilateral cooperation and an “alliance of central powers”.

>> Read here: Ministry of Geopolitical Risks – What the world can learn from Japan

Japan has already established military alliances with US allies Australia and Great Britain and this month expanded its cooperation with Germany and the European Union. President Yoon, who has been in office for less than two weeks, now also wants to clearly position South Korea as a partner of the USA, end the diplomatic ice age with Japan and represent his country’s interests more actively than before in Southeast Asia and the world.

South Korea and Japan are therefore eagerly awaiting details from Biden about his “Indo-Pacific Economic Framework” (IPEF). The US President wants to present the concept in Japan. James Brady, Japan expert for security adviser Teneo Intelligence, sees Biden as a duty, especially because Trump left the Trans-Pacific Free Trade Agreement (TPP) in 2017.
TPP was an attempt by the USA and Japan to establish a counterweight to China, especially in Southeast Asia, with free market access to the USA. “Now countries are asking themselves what the grand plan for US engagement in the region is, both economically and diplomatically and security-wise,” Brady said.

So far, hardly any details of Biden’s strategy are known. “Many countries would like more economic access to the US market,” says Brady, “but to me the IPEF so far looks like an agenda for strategic and not free trade.” The willingness of countries to cooperate is all the more important, including in the chip industry.

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