[Editorial] US' request for trade secrets from S. Korean semiconductor manufacturers crosses line

The unilateralism shown by Biden regarding the US' attempts to get ahead in technological fields dominated by East Asia should not be taken lightly

US President Joe Biden holds up a silicon wafer used in semiconductors as he speaks during the virtually held CEO Summit on Semiconductor and Supply Chain Resilience on April 12. (AP/Yonhap News)

The US Department of Commerce has come under fire for recently asking global semiconductor firms — including South Korean companies Samsung Electronics and SK Hynix — to hand over customer lists and other sensitive business information. While the Commerce Department insists that it’s only trying to address the semiconductor shortage, its request crosses a line, considering how much a company’s competitiveness would suffer if such information were leaked to its rivals.

This request came on the heels of a semiconductor roundtable that the White House organized for global chipmakers and automakers on Thursday. Initial reports suggested that the Commerce Department only wanted to review chipmakers’ inventory and sales figures since automobile manufacturing has been disrupted by the chip shortage.

But the specific requests detailed in an official bulletin subsequently published by the Commerce Department include these companies’ sales figures over the past three years, the technological level (nanometers) of their main integrated circuits, their inventory, their retention, and a list of their three biggest customers. Other questions asked by the Commerce Department were how long it takes those companies to manufacture their top-selling products and whether they’re planning to expand their production facilities.

That information goes far beyond simply determining the level of supply and demand in the semiconductor industry. It would provide the US government with sweeping insight into global chipmakers’ technological capability and customer base.

It’s unreasonable for the US to request information about chipmakers’ customers given the confidentiality agreements that such businesses typically sign. Customers request complete privacy because information about which chipmaker is handling their production could allow inferences to be made about their products’ capabilities.

In apparent recognition of such concerns, the Commerce Department promised it wouldn’t share those business secrets with anyone else, but no company is likely to take that promise on faith.

The Commerce Department’s request crosses a line for a market economy, and it deserves to be criticized as an example of Biden’s brand of unilateralism.

As the Biden administration seeks to curb China’s technological rise, it’s pursuing a plan to reorganize the global semiconductor supply network and to expand manufacturing facilities so as to create a self-contained chip manufacturing network inside the US.

That reflects Biden’s desire to greatly reduce US dependence on semiconductors manufactured by East Asian countries such as South Korea and Taiwan and to protect and promote the US’ own semiconductor industry.

Given the US’ status as one of the leading advocates of free trade and market economies, it ought to retract this unreasonable demand, which would undermine the autonomy of foreign companies. We hope the South Korean government will make its position clear to the US so that we can protect one of our key industries.

Please direct questions or comments to [english@hani.co.kr]