Thu. Jan 20th, 2022

South Korean chipmakers are stepping up their presence in Washington to overcome tensions between the US and China and win critical export licenses to supply Chinese companies targeted by trade sanctions.

Samsung, Hyundai, SK Group and LG, the country’s four largest conglomerates, are leading the efforts as they bow to pressure from Washington to manufacture strategically sensitive goods such as semiconductors and electric vehicle batteries. in the usa.

LG will open a lobby office in Washington next year, after its battery manufacturing unit was LG Energy Solution entangled in a multibillion-dollar lawsuit with domestic competitor SK Innovation that threatened to disrupt Ford’s electric car plans in the US. The company also had to compensate General Motors after a expensive electric vehicle revocation about battery faults.

The Korean groups are seeking export licenses to blacklist Chinese companies, including technology group Huawei and chipmaker Semiconductor Manufacturing International Corp. From November 9, 2020 to April 2021, the US Department of Commerce granted Huawei and SMIC more than $ 103 billion in export licenses.

“We are trying to hire Americans with connections to Washington, as we need to strengthen networks with the U.S. government and Capitol Hill,” said a manager at LG Energy Solution.

“We need to respond quickly to the changing global agenda and reduce business risks in global supply chains amid deteriorating US-China relations, changing international trade order and ESG [environmental, social and governance] requirements. We need an effective channel to deliver our position to Washington, “the executive added.

Bar graph of $ mjd showing South Korea's semiconductor exports

SK Hynix, the world’s second largest memory chip maker, has set up an internal unit this month to run its US business while working on a $ 9 billion acquisition of Intel’s Nand flash memory business.

Analysts said the company was also considering building a wafer plant in the US after struggling to upgrade its Dram facility in Xian, China. The US has historically been opposed to exporting advanced equipment to China.

“Korean chipmakers now have to deal more frequently with the Department of Commerce and the Pentagon to discuss security issues. So they need to hire more former US officials than their lobbyists, ”said Kim Young-woo, an analyst at SK Securities.

SK E&S, the group’s energy unit, will open an office in New York in 2022 under the leadership of Vice President Yu Jeong-joon after taking over several US energy companies in recent years.

“From semiconductors to batteries and hydrogen, US interest in Korean companies is growing sharply,” a SK official said. “We will see more executives with overseas business experience move to the US while the group hires more lobbyists for effective communication with Washington.”

Samsung Electronics last month appointed a presidential-level manager for the first time to run his device-solving business in the US. The move came as the company plans to build a $ 17 billion chip plant in Taylor, Texas.

The Korean campaign coincided with efforts by rival regional chipmakers to increase their U.S. lobbying presence.

Taiwan Semiconductor Manufacturing Company, the world’s largest contract chip maker, has significantly increased its profile in Washington. It’s building a $ 12 billion chip factory in Arizona and competing for $ 52 billion in chip subsidies announced by President Joe Biden’s administration.

The company appointed Nicholas Montella, a former chief executive of the U.S. Chamber of Commerce, as director of government relations last year and Peter Cleveland, a former top lobbyist at Intel, as vice president for global policy and justice in 2019. .

Additional Reporting by Kathrin Hille in Taipei

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