South Korean Tech Companies Double Down on US Investments, Shifting Away From China

The logo of SK Innovation is seen at the company booth during the InterBattery 2021 exhibition at COEX in Seoul on June 11, 2021. (Jung Yeon-je / AFP via Getty Images)
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By Lisa Bian

Earlier this month, South Korea’s tech conglomerate SK Group announced plans to invest $52 billion in the United States. Experts suggest the group’s latest commitment signals South Korea’s big shift from the Chinese supply chain.

On Oct. 31, South Korean President Moon Jae-in attended a global supply chain summit convened by U.S. President Joe Biden in an apparent move to rally allies in reshaping a global supply ecosystem less dependent on China. Soon afterward, South Korean tech conglomerate SK Group announced its pledge to invest $52 billion in the United States by 2030.

With the U.S.-led global supply chain restructuring underway, South Korean tech conglomerates look to secure a foothold in global markets with major investments in the United States.

Earlier in May, following the U.S.–South Korea summit, South Korea’s top four conglomerates—Samsung, LG, Hyundai Motor, and SK Group—had promised nearly $40 billion in U.S. investments in the coming years, including future core industries such as semiconductors, batteries, and electric vehicles.

In late September, SK Innovation, a subsidiary of SK Group, said that it would spend approximately $4.45 billion through its joint venture with Ford to expand battery production in the United States. The joint venture BlueOvalSK is among the largest battery plant investments in the United States.

Battery cells by SK Innovation are displayed at the company booth during the InterBattery 2021 exhibition at COEX in Seoul on June 11, 2021. (Photo by Jung Yeon-je/AFP via Getty Images)

Faced with the intensified competition between the United States and China, the Moon Jae-in government has yet to clarify its position. Its strategic ambiguous diplomatic approach has caused investment hesitations among South Korean enterprises.

In this regard, Chang Suk Gwon, a professor at the Korea Advanced Institute of Science and Technology (KAIST), said he is optimistic. Chang suggested that South Korea has an excellent opportunity to replace China as a global supplier and set up multinational joint ventures within the new alliance circle.

Chang Suk Gwon, a distinguished professor at the Korea Advanced Institute of Science and Technology (KAIST). (Khasub Lee/The Epoch Times)

Chang suggested that the intensified U.S.–China competition and China’s recent energy crisis had made electric car manufacturers worldwide consider shifting their battery supplies away from China.

“These [automakers] are looking for joint ventures with South Korean [battery] companies or diversify their battery suppliers,” Chang said.

China and South Korea dominate the current global electric vehicle (EV) battery market. According to market tracker SNE Research, South Korea’s three major battery manufacturers— LG Energy Solution, SK Innovation, and Samsung SDI—had a cumulative market share of 33.8 percent from January to September this year. Just trailing behind the two Chinese rivals—CATL and BYD—who had a cumulative market share of 39.1 percent.

Chang described South Korea replacing China as a global supplier and establishing joint ventures with foreign companies as a win-win strategy for all.

“This way, South Korean companies and product manufacturers worldwide can form a closely integrated win-win structure,” Chang emphasized. “A great example would be the [SK Innovation-Ford] joint ventured battery plant in the United States.”

However, China currently accounts for 60 percent of South Korea’s semiconductor exports. In the issue surrounding South Korea’s export reliance on China, Chang suggested that South Korea must produce more tech products domestically and open direct channels to the United States without going through China.

“We should diversify our exports and cease reliance on China,” Chang added.

In an interview with The Epoch Times, Kim Seung Wook, an emeritus professor at Chung-Ang University in South Korea, was asked whether the South Korean government and companies can still walk on a tightrope amid the intensified confrontation between the United States and China.

“It is impossible to maintain diplomatic neutrality between two countries with different systems and values. The [South Korean] government should clarify its position. And it is important to follow the public opinion when making choices,” Kim said.

Kim said that many South Korean private enterprises are moving factories from out of China to Southeast Asia and other places. Other countries are rapidly replacing China’s role as the world factory, and the global supply chain restructuring is underway.

Khasub Lee contributed to this report.

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