South Korea’s chip dilemma gets sharper

President Yoon Suk Yeol is walking a diplomatic tightrope. As the South Korean leader starts his week-long state-visit to the United States marking the 70th anniversary of the countries’ alliance, the White House has asked Seoul to “urge” its chipmakers not to fill any supply shortfalls in China if Beijing cracks down on Idaho-based Micron Technology, the Financial Times reported, citing four sources. There are no good options for Yoon.

China’s security review of the $66 billion Micron is largely seen as retaliation against U.S. export controls on chipmaking technology. An extreme outright ban would be painful but manageable for the company: last year, China generated $3.3 billion of its sales, or 11% of the total. Rivals Samsung Electronics and SK Hynix would benefit. China already accounts for more than a quarter of the latter’s top line.

Yet Yoon has reason to do what America asks at the expense of South Korean companies. Bolstering the security alliance amid rising nuclear risks from North Korea will be on the top of his agenda; negotiating better terms for South Korean electric-car and chip investments into the United States will be another. As the chip war heats up, and threatens to widen, Seoul will find keeping its top two trading partners happy even tougher. Reuters