S. Korean companies’ investment in US is opportunity to lead new global supply chain

Major companies in South Korea, including Samsung, Hyundai Motor Company, SK, and LG, are announcing their investment plans for the U.S. prior to the upcoming ROK-U.S. summit. The announced investments in the bio, battery, and semiconductor chip (BBC) industries and the electric car amount to 40 trillion won. It is their response to the request of the U.S., which is reorganizing the supply chain of the advanced industries, but South Korea can also take it as an opportunity to play a leading role in the new global supply chain based on corporate competitiveness.

Samsung Electronics will soon announce a 17-billion-dollar investment in semiconductor foundry. Austin, Texas is mentioned as the investment location. The South Korean company will build a 5-nano extreme ultraviolet foundry line, which is the most advanced among the commercialized semiconductor processes. The company intends to compete against other players in the U.S. market where competition between semiconductor manufacturers is fierce.

The U.S. automobile market is expected to grow 40 percent per year. Hyundai Motor Company decided to invest 7.4 billion dollars in the manufacture pipeline process, including electric car production and hydrogen infrastructure, in the U.S. and will start the electric vehicle sales in the local market from this fall. In the battery sector, SK and LG will join hands with automobile manufacturers in the U.S. – SK Innovation with Ford Motor Company and LG Energy Solution with General Motors.

　

Vaccine leadership is the strategic initiative of the U.S. in relation to the COVID-19 pandemic. During the summit period, Samsung Biologics and SK Bioscience Co will sign a memorandum of understanding with Moderna and Novavax, respectively. The vaccine memoranda were made possible as the interests of American pharmaceutical companies with source technologies are met with those of South Korean companies with production capabilities.

　

The U.S. is competing with China for leadership over the supply chain of advanced industries. South Korea is in a situation in which it cannot miss either the U.S. or China, but the country can use the structure as an opportunity. South Korea is possibly the only country with competitiveness in both the BBC sectors and the electric vehicles in the U.S.-led supply chain. If South Korea gains a strong position in the new supply chain, it can be used as leverage for competition and cooperation with China. The South Korean government and business circles should jointly develop a national strategy to utilize the new opportunities in the rapidly changing international order.