Tech firms from Taiwan, South Korea are seeking increased cooperation

Taiwanese app developer Gogolook counts South Korea as one of its top seven markets worldwide.

Its Whoscall app for phone scam detection has been used in South Korea since 2012 and Korean online services platform Naver became an investor in the company in 2013.

“Whoscall remains popular in the Korean market, where it shows a great demand from caller ID apps,” company spokesman Marco Tsai said.
The Taiwanese developer, with 100 million app downloads worldwide, is no outlier.

Tech firms from the two Asian economies, that industrialised quickly around the same time around half a century ago, are scoping each other out more lately as business allies rather than competitors.

They still compete as fellow exporters of tech hardware, but now they are keen on working together to weather world geopolitical shifts, including hard questions about China and US pressure to join its chip supply chain.

“Both economies are now repositioning themselves to the side of the US-led supply chain and economic integration,” said Hu Jin-li, a professor with the Institute of Business and Management at National Yang Ming Chiao Tung University in Taipei.

“Economically, South Korea and Taiwan are still competitors, but they will show a more cooperative attitude toward science and technology.”

While tech giants on the two sides have not jumped into any mergers or acquisitions, officials have been talking this year while companies such as Gogolook are eyeing business deals – including in its case an unnamed potential Korean partner.

Some of the flash memory modules from tech giant Samsung are being assembled in Taiwan, according to market research firm IDC, while the iconic Korean firm’s smartphones also use application processors designed by Taiwanese chip designer MediaTek.

“[Taiwan and South Korea] have different advantages, and further cooperation can help reduce costs,” IDC senior research manager Galen Zeng said.

“As long as proper measures are taken for information security protection and patent protection, the risks associated with collaboration should be small.”

Taiwan-based chip maker United Microelectronics Corporation (UMC) makes Samsung’s driver integrated circuits, which control other circuits in the same device, according to IDC.

“Korea is an important market for UMC, and the company actively seeks to increase collaborations with existing and potential Korean customers,” a UMC spokeswoman said.

On June 1, business councils from South Korea and Taiwan drew around 60 participants from each side to a conference.

Many took part in an “active” discussion about cooperation in chips, according to a spokeswoman from the Taipei-based organiser, the Chinese International Economic Cooperation Association.

Taiwan’s exports to South Korea rose from US$15.1 billion in 2020 to US$22.2 billion last year, according to Taiwan’s Bureau of Foreign Trade. Imports from South Korea also jumped from US$20.6 billion to US$34.3 billion during the same period, it added.

Politicians in Seoul have answered worries about China by plugging more tightly into US-led world supply chains, said Sean Su, an independent tech commentator in Taipei.

South Korea specialises in memory chips, Su said, while Taiwan depends more on processor chips, meaning the two could work together without risking their competitive edges.

Washington launched its “Chip 4” dialogue with Taiwan, Japan and South Korea last year to focus on strengthening a semiconductor supply chain alliance excluding China – amid the heightened tech war between the world’s two biggest economies and Washington’s concerns that China uses foreign technology for military purposes.

Seoul looks to the US as a security ally and economically relies on the Chinese market, but relations between Beijing and Seoul are seen to be worsening under pro-Washington President Yoon Suk-yeol, especially over the Taiwan issue.

In April, Beijing summoned a senior diplomat from South Korea expressing “strong dissatisfaction” over the country’s joint statement with the United States targeting China in the Indo-Pacific, which was made during Yoon’s visit to the US. According to the White House, Yoon and US President Joe Biden also reiterated the “importance of preserving peace and stability in the Taiwan Strait”.

The US and China have been embroiled in their own trade and tech-sharing disputes since 2018, while economic competition between Beijing and Seoul has also heightened in recent years.

Yoon’s economic and foreign policies are moving towards the US and Japan, Hu added.

Beijing regards Taiwan as a breakaway region of China that must be unified, by force if necessary. Most countries, including South Korea and the US, do not recognise the island as a sovereign state, but are opposed to any forcible change in the status quo.

Countries that have diplomatic ties with Beijing, including the US, acknowledge the existence of the one-China principle stating that Taiwan is part of China, but they may not explicitly agree with it.

“The Koreans are really important players, especially when it comes to Samsung,” said Keith Krach, a former US undersecretary of state for economic growth, energy and the environment, who visited Taiwan in 2020.

But Krach said that South Korea has been “slow on uptake” to join the so-called Chip-4 alliance and that “if Korea keeps selling to China, it puts [the US] at a disadvantage”.

The Ministry of Trade, Industry and Energy in Seoul did not answer a request for comment.

South Korea’s representative to Taiwan, Lee Eun-ho, told domestic media outlets in Taipei earlier this year he wants to support closer semiconductor ties between the two sides to “improve global supply chain resilience”, the Taipei Times reported in March.

Lee met the head of the Taiwan government’s National Development Council earlier this month for discussion about two-way cooperation, with chips in focus, the council said in a statement.

Council chairman Kung Ming-hsin told Lee that although the two sides used to compete because of similar economic development courses, “it seems that there are still many opportunities for cooperation between the two sides”, the statement added.

“Taking the semiconductor industry as an example, South Korea’s strength is memory, and Taiwan’s wafer contractors are developing well, and Taiwan and South Korea can complement each other in supply chain roles,” the statement said. South China Morning Post