Right before South Korean President Yoon Suk-yeol visited Washington, the Financial Times on April 24 said the White House had asked Seoul to pressure its chip manufacturers to refrain from filling any market gaps in China in the event that Beijing prohibits Micron, a company based in Idaho, from selling chips. However, the joint statement after Yoon’s visit was conspicuously silent on this aspect.

Instead, we saw US President Joe Biden saying: “My desire to increase US manufacturing and jobs in America is not about China. I’m not concerned about China. The CHIPS and Science Act wasn’t designed to hurt China.” Yet even US media reports noted that the US government's $280 billion bipartisan CHIPS and Science Act was passed to counter China's increasing dominance in the semiconductor industry and boost domestic manufacturing.

It is worth noting that the US has never before pressured an ally to enlist its domestic companies for such a purpose, signaling a new level of strategic maneuvering by Washington

It appears that the US government is taking a rather bullying approach to counter China's growing economic influence, ratcheting up the pressure on South Korea to fall in line with US demands. It is worth noting that the US has never before pressured an ally to enlist its domestic companies for such a purpose, signaling a new level of strategic maneuvering by Washington. 

In the joint Yoon-Biden joint statement issued in Commemoration of the 70th Anniversary of the Alliance between the United States of America and the Republic of Korea on April 26, the word “semiconductors” was used at four different places, revealing the anxiety in Washington over this matter. The question now is whether South Korea will comply with US demands, or seek to chart its own course.

 In today's globalized economy, semiconductors and memory chips have become a vital component, serving as a critical conduit for geopolitical alliances and intensifying economic competition. With Samsung Electronics and SK Hynix being leading suppliers, South Korea is facing mounting pressure to take sides in the ongoing US-China race for the most advanced chips. Media reports from Seoul even argued that one of the key points of Yoon’s trip to Washington was to persuade President Biden to reduce penalties levied against South Korean semiconductor investments in the US. Eventually, South Koreans appear disappointed.

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A matter of particular urgency is the issue of US export restrictions, aimed at curbing South Korean companies from engaging in commerce with China. For the people of South Korea, this is not merely an economic matter, but a fundamental question of national sovereignty and autonomy. The outcome of these delicate negotiations will have far-reaching consequences, not only for the two nations involved but also for the larger international order. 

The stakes are high, as this issue touches upon not only economic concerns but also broader strategic interests. President Yoon's ability to navigate this delicate terrain will have important implications not only for his own political future but also for the larger geopolitical landscape.

Yet Japan’s previous stories of economic stagnation and decline of semiconductor sector under US pressure are often refreshing. There exists a multitude of concerns that South Korea must carefully evaluate before surrendering to the whims of the US. 

Although the American market presents attractive opportunities for South Korean companies, it is not without significant risks. The obligatory requirement for investing companies to disclose confidential corporate information to the US government in exchange for subsidies and tax credits is colloquially billed as a "poison pill”. The fear is that this data-sharing stipulation may eventually be exploited, compromising South Korea's own technological competitiveness and innovation. 

The United States and South Korea are more like rivals than partners in the semiconductor domain. Given this reality, South Korea's desire for greater assurances to protect its operational secrets is both understandable and warranted. The South Korean conundrum has taken on a new dimension, as the United States seeks to exert its influence over South Korean business operations beyond its borders.

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 The crux of the problem lies in the export restrictions that South Korean companies must adhere to in order to receive investment from the US government, which are designed to impede investment and production of chips in China. Dubbed "anti-China decoupling" measures, these restrictions have set off alarms in Seoul due to their potential to cause significant disruptions to South Korea's semiconductor industry. 

Given the pivotal role that the semiconductor and memory chips industry plays in the country's economic landscape, the situation demands careful consideration and strategic maneuvering from South Korean leaders to strike a balance between their competing interests and accommodating Washington’s intimidating demands.

In its editorial on May 2, The Korea Times has very aptly summarized this dilemma as : “What Seoul expects to get from Washington and Tokyo in return will be hard to compare to what it loses from Beijing and Moscow. South Korea should not, and cannot, be the 51st US state. It must be a balance of power in Asia and the world, however imperfect it may be.”

The author is an international affairs commentator and freelancer based in Karachi, Pakistan.

The views don't necessarily reflect those of China Daily.