SEOUL, South Korea — In a flap that could at least complicate the Biden administration‘s hopes for an international “semiconductor alliance” to bar high-end, high-tech chips from China, Dutch officials are reportedly irked by the excessive demands from Seoul made ahead of the high-stakes state visit earlier this week by South Korean President Yoon Suk-yeol.
The brouhaha broke out Friday when the Joongang Ilbo newspaper reported that, among the alleged demands, Seoul asked for the entry of more visitors than could feasibly visit into the cleanroom of ASML, the Dutch semiconductor equipment manufacturer. A cleanroom is a highly sanitized area with – usually – highly restrictive access regulations.
During his visit, Mr. Yoon, who – unusually for a South Korean leader- has made global diplomacy the centerpiece of his presidency, was photographed in an ASML cleanroom. He also met King Willem-Alexander and held talks with outgoing Prime Minister Mark Rutte before returning home on Friday.
While the report might irritate Mr. Yoon’s PR team, officials on both sides are hoping it is a minor embarrassment given the bigger issues in play between two of the world’s critical players in the semiconductor manufacturing supply chain.
Chips, the de facto hearts of all digitized hardware from smartphones to spacecraft, have emerged as a key component in the struggle between Beijing and Washington for global economic supremacy. That struggle plays out across multiple domains, from military and diplomatic to economic and cultural. Beijing accuses Washington of enlisting allies such as South Korea and the Netherlands to strangle China‘s rise as a high-tech superpower.
The outcome of talks between Mr. Yoon – whose entourage included the heads of chipmakers Samsung Electronics and SK hynix - and his Dutch counterparts was what both sides called a “semiconductor alliance.”
“Both leaders…reaffirmed their commitment to build a semiconductor alliance encompassing the participation of governments, businesses and universities,” a joint statement read. “In this vein, the two leaders agreed to establish a bilateral semiconductor dialogue and a Semiconductor Talent Program, and to continue and expand business-to-business cooperation.”
The two also agreed to oversee and ensure supply-chain security.
The alliance makes sense, given that both nations are U.S. allies and key players in semiconductors and given that the two countries’ chip sectors are complementary rather than competitive: The Dutch position is upstream, the South Koreans’ is downstream.
The Netherlands’ AMSL is the world’s leading supplier of top-tier semiconductor manufacturing machinery, with a monopoly on extreme ultraviolet, or EUV, lithography machines which are indispensable for making the most advanced chips of below 5 nanometers.
South Korea’s Samsung Electronics and SK Hynix are key customers, given that they are the world’s largest and second-largest producers of memory chips, respectively.
Questions hang over whether PR-savvy politicians are needed to promote corporate ties – and over how, behind closed doors, the two administrations really feel about chips becoming centerpieces of the China-U.S. competition.
During the trip, a memorandum of understanding was signed between AMSL and Samsung to build a $762 million joint research center in South Korea. Another MOU was signed between AMSL and SK Hynix on recycling hydrogen, a byproduct of chip-making processes.
“They don’t need the government for that,” said Tokyo-based chip expert Scott Foster of the two corporate MOUs, which were likely agreed upon with little government intervention. “What probably needs investigating is that neither the Dutch or South Koreans, apart from some rabid politicians, are completely comfortable with having their tech industries on a short American leash.”
Diplomatically, the Biden administration is engaged in a long-term term campaign to rally its democratic allies against China.
Financially, the CHIPS Act Mr. Biden signed in August boosts chip production in the U.S., where both Samsung and SK Hynix are expanding operations. That potentially benefits the South Korean firms, as well as AMSL, which is positioned to sell machinery.
In terms of leverage, much of the intellectual property in the design and production of chips is in American hands. That is particularly true of AMSL, said Mr. Foster, a tech specialist at LightStream Research, which analyzes companies and sectors across Asia.
Some of the leading technologies and companies acquired by AMSL for its most advanced machinery were created by U.S.-taxpayer-funded research, or are U.S.-based.
“U.S. law says that any American technology comes under U.S. export restrictions,” said Mr. Foster. “The Dutch go along.”
In the wider competitive landscape, it is possible that South Korean firms, which operate massive chip fabrication plants in China but which make their most advanced products at home, are more wary of China than their Dutch partners.
“It is to the advantage of the Koreans to keep the Chinese a few steps behind them and you can see this in displays as well as chips,” said Mr. Foster. “But that is not true of the Dutch.”
• Andrew Salmon can be reached at asalmon@washingtontimes.com.