Samsung Vice Chairman Lee Jae-yong Visits US for Chip Plant Project

Samsung Group heir Lee Jae Yong (front, L) is pictured on a Pyongyang-bound flight on Sept. 18, 2018. Kyodo News Stills via Getty Images

News Analysis

Samsung Electronics Vice Chairman Lee Jae-yong’s recent trip to North America was likely aimed at finalizing site selection for Samsung’s new $17 billion chip foundry plant. Hong Kong financial expert Liao Shiming believes the United States is cooperating with Samsung to restructure its high-tech supply chain.

Lee appeared at a business airport in Seoul in the early morning of Nov. 14. He briefly talked to the press before hopping onto a charter flight to Canada.

When asked whether he would finalize the foundry investment plan in the United States, Lee replied, “I will meet many [semiconductor] partners.”

This is Lee’s first trip abroad since his parole in August. It is also his first visit to the United States in more than five years. Lee was sentenced to two and a half years in prison on suspicion of bribery in January this year. Deducting the time he had previously been in custody, his prison team was originally set to end next year.

On his trip, Lee was expected to first visit Samsung’s artificial intelligence laboratory in Toronto, Canada, and then go to the United States to conduct final consultations on site selection for Samsung’s first U.S. foundry plant. He will also go to Boston to meet with American pharmaceutical company Moderna, to help obtain COVID-19 vaccines for his fellow countrymen.

Financial Expert: South Korea Readjusting Its Relations with China and US

Liao Shiming, a Hong Kong finance and economics columnist, told The Epoch Times on Nov. 16 that Lee’s U.S. trip was obviously to implement his original intentions.

In the past two years, the economic decoupling between China and the United States has become a heated discussion that has then evolved into “precision decoupling,” with a focus on technology decoupling, Liao said.

He further pointed out that the trend will not change with power transfer from President Donald Trump to President Joe Biden, as it has become a bipartisan consensus.

Liao believes that the United States wants to decouple from China in numerous high-tech areas, including information technology, biotechnology, new material technology, space, biochemistry and other fields. In doing so, the United States plans to restructure its supply chains—its global supply chains will be divided into two subgroups, high-tech products and ordinary products.

At the beginning of this year, when the United States rolled out its new policies regarding the supply chains, South Korea noticed with shock that it was excluded from all U.S. high-tech supply chains. This means, if the United States has developed any state-of-the-art technology, South Korea will be restricted from getting the technology transfer or the equipment output, Liao said.

“This makes South Korea very nervous. Then why did the United States exclude South Korea from its high-tech supply chain? Of course it is because South Korea is too close to China,” Liao explained.

Now the government released Lee from prison so he could meet with his partners in the United States. Liao believes that it is an indication the Koreans wish to restore their relationship with the United States, because the very person in the Korean industry who has the best relationship with the Americans is Lee Jae-yong.

Shortly after Lee was released, Samsung and the United States negotiated an agreement to move chip production to the United States.

Liao explained that from the perspective of the United States, it entered the agreement out of security concerns. “If North Korea ever fires missiles at South Korea, the United States will face a chip shortage crisis. Therefore, U.S.-based semiconductor chip manufacturing is of vital importance,” he said.

US Trade Representative to Visit South Korea

U.S. trade representative Katherine Chi Tai arrived at Seoul on Nov. 18, the first time in 10 years for a U.S. chief trade negotiator to visit South Korea since the bilateral Free Trade Agreement talks in 2011.

Tai’s Asian trip included Japan on Nov. 15, South Korea on Nov. 18, and India on Nov. 22.

She is expected to discuss a number of economic and trade issues with South Korean officials, including the semiconductor supply chain, a digital trade agreement, South Korean companies investing in the United States, and climate change cooperation, according to the Korean Herald.

The outlet also revealed that before Tai’s visit, South Korean chipmakers such as Samsung and SK hynix were asked by the U.S. Department of Commerce to answer a list of questions. The questionnaire involved sensitive business information such as types of technology nodes, semiconductor materials, and other devices. These companies were also asked to reveal their order backlogs and major customers, as well as certain details of their inventory status.

Liao analyzed that these are clear indications that the United States is wooing South Korea to counter the Chinese Communist Party (CCP).

“The United States will certainly adhere to its path on the issues of supply chains and the U.S.-China Trade War, as it is a bipartisan consensus,” he said. “Tai’s visit to the three Asian countries is aimed at taking control of the entire high-tech supply chain, which is part of the restructuring effort.”