Ever since the high-tech sector in our country began to show a momentum of surpassing the United States, the U.S. has started to impose a series of sanctions on our high-tech enterprises, starting with ZTE and Huawei, followed by SMIC and ChangXin. Objectively speaking, it is the U.S.'s fear of the rapid rise of our high-tech industry.

After implementing a chip ban on Huawei, the U.S. has repeatedly modified the rules of the ban, continuously expanding the scope of restrictions on Chinese chips. They have also collaborated with major chip-producing countries such as Japan, the Netherlands, and South Korea, targeting the upstream high-end manufacturing of chips, such as photolithography machines, with the "barb" directly aimed at the entire Chinese semiconductor market.

This has directly led to a massive shock in the global chip industry chain, triggering a sharp decline in the performance of some chip enterprises that rely on the Chinese market. South Korea is a representative example of this. Why is South Korea considered the "cannon fodder" of the U.S. chip ban? Why does our country's equivalent review of the U.S. chip giant Micron also hurt South Korean chip enterprises?

The "Cannon Fodder" in the Sino-American Chip War Emerges

According to a statement released by the Ministry of Trade, Industry, and Energy of South Korea, South Korea's export volume in April decreased by 14.2% year-on-year, and the export of the main export product, chips, decreased by 41% year-on-year in April. Using the term "cannon fodder" to describe South Korea, a party affected by the Sino-American chip war, is quite appropriate.

Advertisement

South Korea's export volume has decreased for seven consecutive months, mainly due to the slowdown in chip exports. Since last August, the export growth rate of South Korean semiconductors has continuously shown negative values.

The decline in South Korea's chip industry export data, apart from being affected by the weak global economy and insufficient demand for semiconductors, the biggest reason is that South Korea has lost most of the orders from the Chinese market.

This, precisely, is the consequence of the U.S. chip war against China.

Our country has a semiconductor consumer market at the trillion level and is a key link in the global chip supply chain. Without the Chinese consumer market, many foreign enterprises simply cannot survive, such as ASML, Samsung, Hynix, and others.

Take Samsung, for example. According to Samsung's quarterly report, the net profit for the first quarter was 64.02 billion won, a year-on-year decrease of as much as 95.5%. The chip semiconductor sector suffered a huge loss of 45.8 trillion won, marking the first time in 14 years.In fact, South Korea's Samsung's chip semiconductor exports have previously been heavily dependent on our country's market. For instance, in the first quarter of 2022, Samsung's reliance on the Chinese market for chips exceeded 60%, and about 30% of our country's trade export volume came from semiconductor sales.

Samsung's chip exports to China are a microcosm of South Korea's foreign trade. In April, South Korea's main export sector, chip semiconductors, plummeted by 41% year-on-year, and Korean chips fell into a trough. While facing huge losses, they still face threats from the United States.

Not long ago, our country conducted a review of the American chip giant Micron, which threatened to withdraw from our market and warned Korean companies such as Samsung and SK Hynix not to fill the market space left by Micron after the review.

Micron's review, Korean companies "pay the bill"

Our country initiated a review of Micron the day before Micron released its quarterly report. After that, Micron threatened to withdraw from our country and warned Korean companies not to fill the market vacuum left by Micron's withdrawal. This is undoubtedly a double blow to Korean companies.

In response to the U.S. chip ban against our country, our country also made a corresponding counterattack, conducting a security review of Micron, a U.S. giant that once held more than 60% of the share in our country's storage chip field.

After a long-term investigation, we found that Micron may have violated user privacy, monitored information flows, collected user key data, and infringed on our country's security.

In addition, according to statistics from U.S. chip industry media, from 2018 to 2022, Micron spent a total of about 10 million U.S. dollars lobbying U.S. authorities and related personnel to facilitate U.S. sanctions on our country's storage chip field.

This American chip giant once held a market share of more than 60% in our country, but with the U.S. suppression of our country's chip field and the breakthrough of our technical personnel, we have developed similar products and formed domestic chip research and development companies such as Yangtze Storage and Hefei Changxin.This is also the reason why Micron has been lobbying the U.S. authorities to impose sanctions on our country in related fields. Micron is concerned about China's storage chip technology; once this technology is domestically produced, Micron will completely lose the market in our country.

As of the beginning of 2023, Micron's market share of storage chips in our country has already dropped to 11%.

Micron is the first company in our country to review the foreign chip field, and it is an equivalent counterattack against the U.S. sanctions on our high-tech companies. Since we dare to review Micron at this time, it indicates that our country's storage chips have already had confidence.

Otherwise, while our chip technology is still lagging behind foreign countries, we would not be able to review it.

After our country reviewed Micron, Micron was furious and reacted strongly, which shows that the U.S. indeed has problems in the security issues raised by our side. Otherwise, in the case where the result is not yet clear, there is no need to be so.

The U.S. warned South Korea not to fill the market gap left by Micron's chip ban in China.

In the difficult situation of South Korea's chip industry, if South Korea does so, it will undoubtedly be a double blow, and South Korea's performance is also worth our consideration.

Because South Korea is the so-called ally of the United States in East Asia, South Korea almost parasitizes on the wings of the United States in all matters. In order to survive and under the pressure of the United States, it has to follow the footsteps of the United States. But if it endangers the economic lifeline of South Korea, I think South Korea will also find its own way out.

In addition, South Korea's semiconductor is the largest market in our country, and the semiconductor industry is also one of South Korea's well-known high-tech industries. South Korea's Samsung and SK Hynix have become world-leading semiconductor storage suppliers.

Our country's review of Micron has hit the "Achilles' heel" of the United States, threatening the global chip hegemony of the United States, so the United States warned South Korea not to fill the market left by Micron's withdrawal.However, in reality, the dominance of American semiconductors has already dealt an incalculable blow to South Korea's chip industry, leading to a crisis in the entire semiconductor industry chain. Semiconductors are the main export product of South Korea, and for a country like South Korea, which is dominated by an export-oriented economy, it is not an exaggeration to describe it as "robbing Peter to pay Paul."

South Korean chips held about 24% of the global market share in 2021, with the export value of South Korean chips reaching $128.7 billion. Exports to China accounted for about $76.9 billion, or 59.7%, and South Korean chips contributed 19.9% to the South Korean economy.

Due to the decline in South Korean chip exports, the Bank of Korea has revised down its GDP growth forecast for South Korea in 2023 from 2.1% to 1.7%.

It is not an exaggeration to say that the losses South Korea has suffered in the Sino-American chip war are far greater than those of the United States. Calling South Korea the "cannon fodder" of the Sino-American chip war is well-deserved.

The tragedy of South Korea is determined by its own economic structure and the guidance of its top echelons. Over-reliance on another country will inevitably lead to such consequences.

Our country is also aware of these issues, especially after the chip war. Only by mastering core and key technologies in our hands can we avoid being coerced by other countries like South Korea, risking economic collapse to unconditionally comply with the United States.

Such economic vassalage is unacceptable, so the self-reliance of China's chips is particularly precious.

The rise of China's self-developed chips

The United States, in order to restrict the development of our country's high-tech field, not only restricts South Korea and the Netherlands from exporting chips and advanced process equipment in related fields to our country but also moves the teams and technologies related to chip research and development to the United States. However, this has further stimulated our country's determination to develop independently.For instance, according to industry data currently available, China's storage chips had already captured 4.8% of the global market share last year, ranking sixth among the top 10 global NAND flash memory manufacturers.

Storage chips lead in the chip subcategory, accounting for 35%. Prior to July 2016, China's flash memory and DRAM were completely choked by the United States. It wasn't until the birth of Yangtze Memory Technologies Co., Ltd., the first company in China specializing in NAND storage chips, that China was able to manufacture storage chips leading Samsung and Micron in just three years.

In addition to the storage chip sector, there are also microprocessors, commodity integrated circuits, and complex System on Chip (SOC) fields, totaling four broad classifications.

At present, China still has a significant gap in microprocessors compared to foreign countries, which is what people often refer to as advanced processes such as 28NM, 15NM, 5NM, 3NM, and so on.

According to a semiconductor industry report, China's imported chips decreased by approximately 15.3% year-on-year in 2022. Additionally, data from China's General Administration of Customs shows that China's trade surplus in April increased by 96.5% year-on-year, with the largest factor being the significant reduction in semiconductor imports.

Apart from the industry contraction caused by economic recession, the core factor is the continuous increase in the market share of domestically produced chips in China.

Although more than 5,000 chip-related companies in China's original chip industry chain went bankrupt in recent years, from another perspective, it is also necessary to eliminate some backward production capacities after more than a decade of extensive development in China's semiconductor economy. This presents both danger and opportunity for China's chip companies.

Coincidentally, in 2020, the year when the United States aggressively suppressed China's chip industry, China surpassed the United States to become the world's largest semiconductor consumer.

The restrictions imposed by the United States on China's chips cannot change the fact that China's technology is rapidly developing. Although there is still a certain gap between us and the United States in the field of advanced processes, the more the United States restricts and prohibits countries like South Korea from exporting to China, the more we should accelerate independent research and development and break through core technologies.The United States' chip embargo against our country has led to a predicament in its domestic chip industry and has also caused a sharp decline in South Korea's export sector. Such actions are not only unpopular in our country, but the whole world has also seen through the United States' tactics.

In response to the oppression of South Korean companies to prohibit the export of memory chips to our country, we have long had countermeasures in place. A series of national brands, including the Yangtze River brand, have already stood firm.