[Editorial] S. Korea must stand its ground against US requests for semiconductor secrets

South Korea would do well to take a page from Taiwan's book when it comes to responding to the US' demands for confidential business secrets from semiconductor manufacturers

Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki presides over the first strategy meeting on external economic security Monday at the government complex in Seoul. (Yonhap News)

Amid controversy over the US government’s demands for Samsung Electronics, SK Hynix and other global semiconductor companies to hand over sensitive business secrets, the South Korean government stated its official position on the matter Monday.

It did not go into much detail, saying only that Seoul had relayed its concerns to Washington and would be actively discussing matters in the days ahead. This is all too passive of a response to these demands from the US, which are a serious issue bordering on infringement of South Korea’s economic sovereignty.

On Sunday, the South Korean government held its first strategy meeting on external economic security, presided over by Deputy Prime Minister Hong Nam-ki.

Hong stressed the need to “base our response on corporate autonomy [considerations for sensitive information], government supportiveness [easing the burden on companies], and cooperativeness between South Korea and the US.” In particular, he said the South Korean government “plans to strengthen communication and cooperation with the business community.”

These remarks alone offer no insight into how exactly Seoul intends to respond to Washington’s demands. Hong appears to have stated a basic position in consideration of Korea’s alliance with the US.

This stands in contrast with the Taiwanese government, which overtly balked at the request. Taiwan is home to Taiwan Semiconductor Manufacturing Corp. (TSMC), the world’s top-ranked foundry (semiconductor contract manufacturing) business.

Taiwanese National Development Council Minister Kung Ming-hsin firmly stated on Sept. 30 that TSMC would not give out customers’ confidential data, and that it would not take part in any practices that jeopardized customer or shareholder rights. The council is a key TSMC shareholder, while Kung himself is a member of the company’s board of directors.

The US claims its demands are meant to overcome semiconductor shortage issues, but a closer examination reveals aspects that are difficult to make sense of.

The areas where it is asking for information include three customer lists for different items, percentages of sales coming from specific accounts, and technology stage data for key chips. The US has said that the information is to be provided on a voluntary basis, but it has also warned that it has ways of collecting it from uncooperative companies.

Analysts suggest this sort of out-of-line request is meant to establish a stable semiconductor supply chain in the US while shutting China out.

Currently, the US is going so far as to hand massive subsidies to the semiconductor design company Intel as a way of getting it to expand its manufacturing infrastructure in the US. Under these circumstances, what sort of guarantee is there that sensitive information from Samsung Electronics might not be passed along to someplace like Intel?

Once a company’s confidential information is leaked, it causes irrevocable damage. No matter how important an ally the US may be, the South Korean government needs to clearly draw the line when it comes to the key interests of its companies and the state.

The US, for its part, needs to recognize how damaging its demands are to trust between the two sides and how unhelpful they are for creating the kind of technology alliance that it is pursuing. They must be retracted immediately.

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