President Moon Jae-in and US President Joe Biden agreed to work together on expanding semiconductor supplies and terminate a missile pact that capped Seoul’s missile development at their first in-person meeting over the weekend in the US. Moon wrapped up the five-day trip Sunday.
The two allies are seen as bolstering economic and military ties as the US increasingly finds itself at odds with China seeking to exert influence in the region.
Samsung Electronics, the world’s largest chipmaker, said it will build a $17 billion chip plant in the US this year, making up almost half the $39 billion investments Seoul promised Washington in strategic sectors.
South Korean automaker Hyundai Motor will build electric vehicles in the US, while LG Energy Solution, the world’s second-largest battery maker, and SK Innovation will work with US firms to provide batteries for electric vehicles.
Experts said the multibillion dollar investments come at a right time as Biden has recently proposed $50 billion to subsidize chip production. Korean firms will likely face competition as the world’s No. 1 chip contract manufacturer Taiwan Semiconductor Manufacturing Co. is looking to build chip factories in the US.
“Samsung is seeing something better there than here. That’s why it is pouring billions over there, which means there is ample room for the Moon government to do something here to raise the same kind of investment,” said Sung Tae-yoon, an economics professor at Yonsei University.
Sung suggested the government could address regulations governing labor practices, for example. In February, key executives at Samsung, which had long refused to recognize labor unions, were jailed for sabotaging workers’ efforts to organize unions.
The government could put in place more reasonable rules to help avoid such disputes, Sung said, adding firms want fewer management uncertainties while workers seek guarantees that their rights are protected at their workplaces.
Other experts said the Moon government should have a bigger picture on how Korea’s key industries should expand as rivals try to outcompete tech giants here.
“With COVID-19 vaccines the US promised Korea, it could look like a quid pro quo. It shouldn’t. Our investments there should serve our industries back home,” said Cheong In-kyo, a professor of international trade at Inha University. The US said it will provide COVID-19 vaccines to the Korean military.
The overall number of investments is staggering but the government should have a long-term plan in place to pull ahead in the global race to retain the upper hand in key high-tech industries, Cheong said.
Meanwhile, military experts said ending the missile pact Korea and the US signed in 1979 could pave the way for a more stable Seoul-Washington relationship. The two allies have seen their ties frayed over approaches to North Korea.
“It’s a gesture of goodwill, for a fresh start in the longstanding ties that had been rocky on engaging Pyongyang. It’s about redefining the alliance as Washington reels in Seoul to push back against Beijing,” said Shin Jong-woo, a senior analyst at the Korea Defense and Security Forum.
Other experts saw it as a chance for South Korea to expand its missile arsenal and use that as a bargaining chip later when it discusses with the US bringing in its long-range missiles to rein in aggression from North Korea.
“It’s far away I have to admit. But when that time comes, we could have a say and leverage negotiations,” said Ryu Seong-yeop, an intelligence analyst at the Korea Research Institute for Military Affairs.
By Choi Si-young (firstname.lastname@example.org