The gist of it: none of the dynamics of debate around the CHIPS Act bode well for a consistent US strategy, while countries like South Korea have little resistance to government subsidies and protectionism. Asia’s manufacturers are going to be steaming ahead in support of their manufacturing companies, and while political division and contested elections hit the US in 2024. The real issue for the display industry will be whether Chinese display manufacturers can catch up on OLED manufacturing with the Koreans fast enough.
The Korean Herald reports, the South Korean government has pledged to support the advanced chip industry to maintain competitiveness in the face of emerging technologies like AI. Vice Trade Minister Chang Young-jin emphasized the importance of advanced semiconductors and acknowledged the impact of AI chatbots like ChatGPT. The government plans to establish a $224 billion advanced logic chip cluster and invest 3.2 trillion won in tech development projects for next-generation chips in AI, automotive, and electricity sectors. South Korea also aims to collaborate with the US on R&D in three advanced chip and semiconductor fields (next generation chips, advanced packaging technology and advanced equipment), following a recent summit between the two countries’ leaders.
Meanwhile, Jack Sullivan, the US National Security Advisor, delivered a speech at the Brookings Institute, emphasizing the need to address economic risks and national security vulnerabilities in the semiconductor and clean-energy industries. He highlighted that the US currently only manufactures around 10% of the world’s semiconductors and has limited domestic production of critical minerals essential for clean energy.
Sullivan credited the bipartisan CHIPS and Science Act for significantly increasing investment in the semiconductor industry, while acknowledging that it’s still in the early stages. He also expressed concern over the potential weaponization of clean-energy supply chains, as seen with oil in the 1970s and natural gas in Europe in 2022. In response, the Inflation Reduction Act and Bipartisan Infrastructure Law aim to take action to address these risks.
While recognizing the importance of building domestic capacity, Sullivan stressed that pursuing autarky is not the goal (in an autarkic system, a country attempts to produce all the goods and services it needs without engaging in significant trade with other nations). Instead, the US seeks to achieve resilience and security in its supply chains. He emphasized the need for international collaboration, urging partners to join the US in building capacity, resilience, and inclusiveness across industries like semiconductors and clean energy.
The contrast is very specific in helping us understand how the impact of geopolitical concerns is reshaping supply chains. The closely aligned and interconnected relationships among companies in countries like South Korea, Japan, and China are likely to benefit directly from the investments their governments are making in manufacturing. In contrast, for the US, the lack of alignment and the competing demands of individual multinational corporations, dictated by short-term financial goals to appease investors, are leaving a lot of doubt and uncertainty around the Biden administration’s attempts to support US manufacturing interests. In 2024, there will be a presidential election, and the US relationship with China is going to be a point of contention between the two parties. Probably best to just look at what Apple does and say, well, that’s the way to go.
