With the impacts of economic competition between the United States and China spilling over to the rest of the world, the semiconductor industry has increasingly become a centerpiece of discussions on global economic security. In March 2022, President Joseph Biden proposed the establishment of the so-called “Chip 4 Alliance” between the United States, Japan, South Korea, and Taiwan, with the aim of creating a more secure global semiconductor supply chain through the formation of a democracy-based, multilateral grouping. Specifically, the agreement sought to foster cooperation between member nations on advanced semiconductor production by geographically diversifying production, protecting the intellectual property (IP) of private firms, imposing uniform export controls on China, and promoting “friend-shoring.”
While Japan and Taiwan were generally supportive of the initiative, initial reactions in the Republic of Korea (ROK) were more hesitant and unclear. ROK President Yoon Suk Yeol and Minister of Trade, Industry, and Energy Lee Chang-yang have agreed to South Korea’s participation in the talks, and the Yoon Administration’s position demonstrates a notable change in willingness to engage—with President Yoon’s outspoken support for Taiwan and warming relations with Japan providing a rare and crucial opportunity to develop stronger multilateral relations. However, significant skepticism remains regarding the nation’s commitment. The ROK’s reservations are linked to broader flaws in US efforts to facilitate South Korea-Taiwan cooperation. Furthermore, the Chip 4 Alliance’s overemphasis on isolating China, its preoccupation with securing US interests, and the lack of consideration for regional politics are all underlying issues reminiscent of past failed attempts to persuade the ROK to become more involved with cross-Strait issues.
Possible Challenges to Cooperation
Although President Yoon is making an effort to change the status quo between South Korea and its democratic neighbors, full commitment to the Chip 4 Alliance remains elusive. The initiative’s focus on excluding China and securing US interests could undermine the development of meaningful ties between member states, which could in turn lead to a failure to overcome underlying obstacles. Without strong relations and trust within the collective, it will be difficult to successfully and uniformly execute provisions in the alliance—for instance, on matters related to relaxing export controls, and regulations affecting re-shoring.
There are three major obstacles that exist in the road to cooperation between Taiwan and South Korea. First, the two states are direct competitors in the integrated circuit and semiconductor industries, with Taiwan Semiconductor Manufacturing Company (TSMC, 台灣積體電路製造股份有限公司) and Samsung—the two powerhouses of the industry—combining to account for 74.3 percent (58.5 percent for TSMC, 15.8 percent for Samsung) of global foundry market revenue as of the fourth quarter of 2022. This competition illustrates the inherent challenge of convincing private firms to re-shore production and technology to their competitors, particularly as Taiwan-South Korea political relations remain distant. Industrial competition between the two is unlikely to cool anytime soon, with TSMC looking to challenge Samsung’s superiority in two-nanometer node production, and Samsung aiming to catch up to TSMC by implementing its gate-all-round (GAA) transistor architecture in chip manufacturing.
Furthermore, even with intellectual property protections in place to alleviate re-shoring concerns, South Korean enterprises may remain reluctant to share their intellectual property (IP). This sentiment is also shared by the South Korean public, with many viewing the Chip 4 Alliance as an attempt to take advantage of South Korea’s advanced technology. These concerns have only been exacerbated by US domestic policies—such as the Chips and Science Act, which sought to boost US chip production. In polling conducted by the Dong-a Ilbo and the ROK Ministry of Patriots and Veteran Affairs, 82.6 percent of South Koreans feel that US semiconductor policies should consider the interests of South Korea and other allies, while 80 percent believe that US inflation control policies should do the same. This implies that the general public is dissatisfied with US policies regarding semiconductor cooperation, stemming from Washington’s over-concentration on national interests in its approach to alliance-building.
Second, Chip 4’s emphasis on isolating China from semiconductor and technology supply chains highlights another flaw in US policy. It is a well-known fact that South Korea’s export markets rely heavily on China, with 24.1 percent of South Korea’s total exports flowing to China in 2021. This reliance is even more pronounced in the semiconductor sector, as 41.1 percent of the ROK’s chip exports in 2020 went to China, with a further 20.8 percent shipped to Hong Kong. Moreover, China remains a keystone component in South Korea’s semiconductor production chains. Approximately 40-50 percent of dynamic random-access memory (DRAM) and 20 percent of NAND flash memory chips produced by South Korea’s SK-Hynix are manufactured in China. [1] This is also the case for Samsung, as around 40 percent of its NAND chips are produced in China. Not only will this dependency make it difficult for South Korean companies to practice export controls and geographically diversify, but it has also raised concerns in the South Korean public over possible threats to overall economic security.
Anxiety over national and economic security is already keenly felt among South Koreans, with many viewing US-China competition as the country’s primary national security issue, surpassing even North Korea. In reality, the Chip 4 Alliance does little to assuage South Korea’s concerns over economic coercion and a potential trade war with China. Without precise mechanisms and provisions to help mitigate the ROK’s economic and security costs of commitment, it will be challenging to gain South Korea’s confidence and engagement on initiatives like Chip 4.
The third significant challenge to collaboration is the turbulent state of diplomatic relations between South Korea and its neighbors. Due to bitter historical legacies, it is no secret that South Korea’s society holds significant distrust toward Japan. This sentiment continues to shape ROK politics and policies, as reflected in controversies surrounding the Dokdo Islands, “comfort women,” and Fukushima wastewater. Such skepticism of Japan was on full display in the wake of President Yoon’s recent visit to Japan. Yoon’s comments on fostering relations with Tokyo were met with immense public backlash, and his approval rating since the visit has been on a continuous decline—demonstrating the public’s disdain for the administration’s attempts to develop cooperative relations with Japan.
Coupled with economic rivalry, Taiwan’s perception of South Korea has long been characterized by mistrust and insecurity, and South Korea-Taiwan relations have seen little to no development since former ROK President Roh Tae-woo decided to recognize Beijing over Taipei in 1992. For the Taiwanese people, especially among older generations, this switch was a bitter betrayal. Chiang Kai-shek’s (蔣介石) Republic of China (ROC) was historically an advocate for the ROK—being one of the first nations to recognize the ROK’s status as a sovereign state in 1948, and supporting the UN resolution to provide aid to South Korea in 1950.
Implications for Taiwan-South Korea Relations
The shortcomings of the Chip 4 Alliance could potentially have significant implications for Taiwan-South Korea relations. The initial hesitation and continuing lack of initiative from South Korea both suggest that Seoul feels little commitment to the agreement, reducing Taiwan’s confidence in the alliance. Given Chip 4’s status as a high-profile opportunity for relationship-building, this lack of confidence may cause Taiwan to be more reluctant to engage with South Korea on other political and economic issues in the future.
However, the agreement could still have positive benefits for ROC-ROK relations, the primary one being that Chip 4 presents an opportunity—despite the lack of formal diplomatic relations between Taiwan and South Korea, the grouping could still provide a forum for interaction. Experience and exposure remain crucial prerequisites for developing strong diplomatic partnerships. As two nations collaborate and accumulate experiences, they can work to build a relationship based on trust and mutual respect. For South Korea and Taiwan, Chip 4 could be the perfect opportunity to improve a distant and complicated relationship.
A Step in the Right Direction
Although a flawed proposal, the Chip 4 Alliance is nevertheless a step in the right direction, potentially serving as a key steppingstone. Something that the alliance does address is the crucial absence of a multilateral agreement that can create a more cohesive and effective international order in the region. China’s aggression and coercion have not only exposed the vulnerability of regional economies, but have also drawn attention to the insecurity that exists in Asia’s international system. Despite talks of democratic cooperation, instances of China weaponizing its economic gravity for coercive purposes have been met with minimal collective action in response. The development of uniform export controls and coordinated geographical diversification are both practices that could act as a precursor for future multilateral efforts.
Taiwan can help provide solutions to the challenge of fostering cooperation between the participating Asian nations. Taiwan’s semiconductor manufacturing capabilities have taken the spotlight, but Taiwan is also a country with a vibrant democratic and civil society, whose sovereignty and freedom are constantly under threat. For Taiwan’s democratic neighbors, support for Taiwan does not just mean opposing China’s actions; it is also a means of preserving the values of the liberal international order and security in the region. This is a stance echoed by President Yoon and President Biden, who have “reiterated the importance of preserving peace and stability in the Taiwan Strait as an indispensable element of security and prosperity in the region.” This sentiment is shared by Japan, with Chief Cabinet Secretary Hirokazu Matsuno stating that “The importance of peace and stability in the Taiwan Strait is not only important for the security of Japan, but also for the stability of the international community as a whole.” The topic of Taiwan’s security is evidently one that all parties can agree upon. Therefore, cross-Strait tensions may prove to be key in facilitating cooperation through solidarity.
At the same time, Chip 4 is an essential step in Taiwan’s participation in the international system. An ongoing challenge for Taiwan is its ostracism from global institutions. Therefore, Taiwan’s participation in such an alliance could be a significant step in signaling solidarity, which could potentially help promote Taiwan’s participation on the broader international stage. Furthermore, with the increased value of semiconductors, it is possible that the Chip 4 Alliance could become a model for a more globalized alliance in the future.
Conclusions
If the United States and Taiwan want to engage the ROK on cross-Strait issues and secure full commitment to multilateral initiatives, it is crucial to first address the challenges and concerns faced by the ROK, and devote more attention to bilateral relations between South Korea and Taiwan. For there to be an effective and enduring coalition, there must be a foundation of trust and belief—not just between governments, but between people. If an alliance between two nations does not have the support of their respective populations, healthy relations will be difficult to sustain. To achieve closer bilateral relations, Taiwan and South Korea should promote greater exposure and interactions between their citizens through economic and cultural exchange. In the context of technology, there should be an emphasis on facilitating cooperation on semiconductors through their respective private firms. In doing so, the two countries can build up the fundamentals of trust that can later pave the way for more diplomatic cooperation.
Historically, the ROK has maintained an ambiguous position on cross-Strait tensions issues, content to strike a balance between the United States and China. However, times have changed. South Korea is now willing to take a harder stance against China and is showing support for peace within the Taiwan Strait. However, with the limit of one five-year presidential term in South Korea and low approval ratings, President Yoon’s time in office may prove short-lived. Furthermore, there is no guarantee that his successor will have the same platform regarding Taiwan. Although there is no certainty whether the rhetoric from President Yoon will be met with action, it is important for both nations to recognize how valuable an expanded ROK-ROC relationship is. If there ever was an opportunity for Taiwan and South Korea to rekindle their relationship, now is the time.
The main point: ROK President Yoon Suk Yeol’s recent actions to change the status quo with Japan and Taiwan have provided the rare opportunity to secure greater South Korean commitment on cross-Strait issues. However, the United States’ attempt to engage South Korea through the Chip 4 Alliance seems to be ineffective, and Seoul is showing itself to be reluctant to commit to the initiative.
[1] According to TechTarget, “Dynamic random access memory (DRAM) is a type of semiconductor memory that is typically used for the data or program code needed by a computer processor to function.” Also per TechTarget, “NAND flash memory is a type of non-volatile storage technology that does not require power to retain data […] NAND flash saves data as blocks and relies on electric circuits to store data.”
