Inflation Reduction Law Fuels Uncertainty for South Korea’s Chip 4 Membership

During a visit to South Korea, US Vice President Kamala Harris vowed to work with South Korea to resolve the dispute over the US Inflation Control Act (IRA). In a law signed last month, the IRA sets a tax credit of up to US$7,500 for electric vehicles (EVs) assembled in the United States, Canada and Mexico, while South Korean automaker Hyundai Motor and its affiliates It may damage some Kia vehicles. Hyundai, the second largest US EV player by market share, announced in May 2022 that it would invest US$5.5 billion to build its first EV and battery factory in Georgia, USA. However, production will start in 2025 and will not be subject to state subsidies until then, prompting skepticism against the United States within South Korean industry. It further complicates ongoing US efforts to secure South Korea’s commitment to join the “Chip 4” alliance.

Some people already have a pessimistic view of US-Korea labor relations. “Our country’s semiconductor industry has a lot of concerns about what the US government is doing these days,” South Korea’s Trade Minister Ahn Deok-geun said in a recent interview. financial timesWonho Yeon, a research fellow at the Korea Institute of International Economic Policy, said: business korea The IRA-like measures are likely to be implemented “on a whim” until the 2024 US presidential election. In response, Yong said the South Korean government needs to strengthen its bargaining power.Report from South Korea Mainichi Keizai Shimbun claimed that the South Korean government had proposed the creation of a joint response team made up of government and industry officials to strengthen South Korea’s negotiating position.

SK Group Chairman Choi Tae Won business korea The second-largest conglomerate after Samsung is changing its strategy in preparation for further regional turmoil. SK Group’s chairman, who previously focused on maximizing profits and efficiency, said safety will become a priority for the company these days, citing potential US-China military conflicts over Taiwan. He added that he has plans for different scenarios. – Case Scenario. He further said Chey cannot abandon the Chinese market, which accounts for a large share of South Korea’s exports. Instead, SK Group leaders urged the government to take steps to address the situation and provide more support to South Korean companies, saying it would “make no sense” for companies to resolve such issues alone. By 2021, China will be South Korea’s largest trading partner, accounting for 24% of South Korea’s total trade. Also, about US$76.8 billion of South Korea’s chip exports went to China in the same year.

However, some in the Korean chip industry see joining the Chip 4 alliance as inevitable. At a seminar held by the Korea Federation of Industries on Sept. 28, South Korean lawmaker and former Samsung executive Yang Hyang-ja, chairman of the National Assembly’s special committee on the semiconductor industry, said that it is a essential,” he told the audience. Joining the Chip 4 Alliance, given the U.S. dominance upstream in semiconductors. Nonetheless, lawmakers condemned the South Korean government’s failure to negotiate effectively with the United States on chips and automobiles, and said the government should send negotiating representatives with deep industry knowledge. Korea JoongAng Ilbo report. Yang, the principal architect of the K-Chip Act, South Korea’s response to the US Chip Act, interprets the US Chip Act as the country’s attempt to catch up with South Korea and Taiwan in logic and memory chips. Taking this opportunity, South Korea’s parliament will pass the K-Chips law, according to various South Korean media outlets.

The K-Chip Act, proposed in early August, aims to allocate US$260 billion to South Korea’s semiconductor industry over five years, cut bureaucracy, increase tax credits and sponsor training programs. However, K-Chips’ actions remain stalled as the major political parties have not reached consensus on the content. Inflation Reduction Law Fuels Uncertainty for South Korea’s Chip 4 Membership

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