DRIVING A WEDGE
The second interpretation is that the retaliation against Micron is Beijing’s attempt to drive a wedge on two fronts: First between the US and South Korea, the world’s dominant memory chip producer, and second between the US government and private chip firms in the US.
China’s appetite for chips must be filled by other suppliers if no Micron chips are to be used in China. For sure, Chinese manufacturers stand to gain, but they cannot replace Micron’s share entirely on their own.
The only foreign suppliers that can fill the shortage in memory chips are South Korean firms, Samsung and SK Hynix. They stand to gain from the Micron ban, which engenders a situation of diverging interests between the US and South Korea
It was reported that the US government had earlier asked the Korean government to urge its chipmakers not to backfill the shortage in the situation that Beijing imposed sanctions on Micron. Seoul’s calculation is complicated, as the chip manufacturers could boost the ailing economy that has been running consecutive trade deficits since March 2022.
However, given the decisive tilt toward the US by the conservative Yoon administration and the economic pain Seoul had suffered from Beijing’s sanctions due to the deployment of US THAAD anti-missile radar systems, Seoul will closely consult with Washington before it decides what action to take toward China.
For all the latest business News Click Here
