US Softens Stance in Technology ‘War’ with China, Allows South Korea and Taiwan to Continue Business in China

Jakarta CNBC Indonesia – The United States (US) government seems to be starting to soften in the technology ‘war’ against China. According to reports The Wall Street JournalThe US allowed semiconductor giants South Korea and Taiwan to continue their business in China without sanctions.

This was revealed directly by the US Undersecretary of Commerce for Industry and Security Alan Esteves. Some analysts see this move as weakening US export controls designed to slow China’s technological advances.

The latest US decision contrasts with the discourse delivered in October last year. At that time, the US strictly imposed restrictions on China’s semiconductor industry.

The US does not want China to play a role in the development of advanced semiconductor technology. Therefore, the US is trying to place restrictions on shipments of chip-making tools from country and allies.

Semiconductor giants South Korea (Samsung Electronics) and Taiwan (TSM) were given a one-year exemption to continue investing in China. This is because the two companies have already built facilities worth billions of dollars in the Bamboo Curtain country.

After a year, the US’ initial plan was to limit cooperation between South Korean and Taiwanese manufacturers in China. However, Estevez said that the 1-year policy would be extended.

That way, South Korea and Taiwan can still breathe easy to do business with China after October this year, quoted Monday (12/6/2023).

For information, South Korea and Taiwan willy-nilly submit to the US because they both depend on technological equipment developed by US, Dutch and Japanese manufacturers. Previously, the Netherlands and Japan had agreed to fully support the US move.

South Korea is the country that is hit by the biggest dilemma. On the one hand, South Korea has maintained good relations with the US. However, China is South Korea’s biggest export market for the semiconductor sector.

Apart from that, South Korea also needs to be careful with China. This is because China has close ties and great influence to North Korea (North Korea), which is the ‘enemy’ of South Korea.

It seems that the US has realized the important role of China which cannot be underestimated. US National Security Adviser Jake Sullivan said in his speech that the US had no intention of separating from China.

Agreed, Finance Minister Janet Yellen also said a complete separation of the Chinese economy would be disastrous for both countries.

However, many US Senators are against the government’s decision. One of them is Senator Marco Rubio from the Republican party. He urged US Commerce Secretary Gina Raimondo to strengthen controls on technology exports, including semiconductors.

Apart from that, members of the American Enterprise Institute also said that the US would not be able to control exports if it was not firm with China.

“We can’t control technology when two big companies [Samsung dan TSM] free to do what they want,” he said.

“You look weak,” he said, referring to the current US administration.

(fab/fab)