(LEAD) S. Korea should be 'cautious' in deciding on joining U.S.-led chip alliance: ICT minister

All News 14:25 July 20, 2022

(ATTN: ADDS more info, background throughout)

SEOUL, July 20 (Yonhap) -- South Korea should be cautious in deciding whether to participate in a U.S.-proposed chip alliance known as the Chip 4 or Fab 4, as potential ramifications could affect not only the country's semiconductor industry but the economy at large, Seoul's ICT minister said Wednesday.

Earlier, a source in Washington told Yonhap News Agency the United States has asked South Korea to inform Washington by end-August whether it plans to participate in the envisioned platform involving the U.S., South Korea, Japan and Taiwan, apparently aimed at coping with potential supply chain disruptions related to China.

South Korea's presidential office said Seoul and Washington are using "various channels" to explore ways to strengthen cooperation in the chip sector.

"I believe we need to be cautious" in deciding on the chip alliance matter, Science and ICT Minister Lee Jong-ho said at a press conference in Seoul when asked about the issue.

"If a problem arises (from the decision), it could affect not only the semiconductor industry but also affect other industries," Lee said, adding that he has collected opinions on the matter, including from people that do business in China.

The U.S. proposal puts South Korea in a delicate balancing act between its long-standing ally and its largest trading partner, China. The neighboring country also supplies many of the raw materials needed in chips, batteries and other key export items.

The minister said a decision on whether to join the alliance should be reached after making "cool-headed" assessments on the pros and cons.

Semiconductors have emerged as a key field of cooperation between Washington and Seoul, with U.S. President Joe Biden having made his first stop at a Samsung Electronics chip plant during his trip to South Korea in May.

U.S. Treasury Secretary Janet Yellen on Tuesday also championed bilateral "friend-shoring" to build more stable supply chains in a bid to reduce dependence on China for supplies of semiconductors, batteries and other key industrial materials.