Biden orders semiconductor and battery supply chain review Is Korea also affected?

US President Joe Biden ordered a review on the supply chain of critical items that revealed problems in the supply and demand structure on the 24th (local time).

The subject of the review includes semiconductor chips and vehicle batteries that show technological superiority in the global market, which could affect Korean companies according to the review results.

According to Reuters, President Biden signed an executive order that requires a 100-day review of the supply chain of four key items, including semiconductor chips, large-capacity batteries for electric vehicles, rare earths, and pharmaceuticals.

These items have in common that the U.S. has had difficulties in supply and demand in the global supply chain due to the epidemic of the novel coronavirus infection (Corona 19).

The production line of US automakers stopped due to the lack of semiconductor chips for vehicles, and during the corona 19 pandemic last year, there was a serious shortage of personal protective equipment (PPE), which had been dependent on imports for an absolute amount.

There are many concerns that rare earths, which have a high proportion of Chinese imports, can also be weaponized, such as limiting exports due to the conflict between the US and China.

The White House said, “The United States is a net exporter of electric vehicles, but it is not a leading country in the battery production chain.”

In addition to the four items, the executive order also requires a one-year supply chain review for six industries, including defense, health, information and communication technology, energy, transportation, and agricultural products and food.

The White House said Congress would make bipartisan action on supply chain issues, and said the administration would be in close contact with Congress in obtaining recommendations during the review period.

In fact, before signing the executive order, President Biden called about 10 members of the Senate and House of Representatives to the White House to request bipartisan cooperation.

He also announced that he would push for a bill to fund semiconductors.

In the case of the four major items that are held for 100 days, it is interpreted that the intention to prevent the technological rise of China and to reduce the US dependence on China is reflected.

There is also an evaluation that a part of the initiative, which President Biden announced that he would contain China through technical competition instead of Donald Trump’s `tariff war` method, was embodied through this executive order.

In China, semiconductor and vehicle battery technologies are evolving day by day, and in the case of medicines and rare earths, there are many claims that the United States should look at security rather than supply and demand, as the US relies heavily on imports from China.

White House officials said the executive order was not aimed at China or any one country, but more focused on diversifying supply, but said over-reliance on China and hostile countries for important items is a key risk to be addressed, Bloomberg said.

It is also worth noting that semiconductor chips and vehicle batteries, which Korea dominates, are included in the four items to be reviewed.

Korea is the world’s strongest player in the memory semiconductor field, and vehicle batteries are also competing fiercely with Japan and China in the global market.

It is observed that if the Biden administration’s review focuses on reducing dependence on China on these items and focusing on expanding and strengthening the supply chain through alliances, it could benefit Korea.

On the other hand, the result may be toward fostering own companies or attracting foreign companies by focusing on increasing the production of these items in the US.

According to Bloomberg, an administration official said the review could lead to changes in financial incentives, tariffs and procurement policies.

The US administration said it plans to consider cooperating with the alliance or encouraging the production of key items in the country.

One source said, “If the review results come from strengthening the supply chain with the alliance, it could work in favor of Korea,” he said. “Once we have to see what conclusions the US will draw, we will have to see.”

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