U.S. grants Korean companies time to adapt to new vehicle supply chain rules

The United States will provide "lead time" for Korean companies to modify their supply chains for connected vehicles, a senior U.S. official announced Tuesday.

U.S. Under Secretary of Commerce for Industry and Security Alan Estevez speaks during an economic security forum in Washington on Sept. 10, 2024. [YONHAP]

The United States will provide "lead time" for Korean companies to modify their supply chains for connected vehicles, a senior U.S. official announced Tuesday. This comes as Washington is accelerating efforts to implement regulations aimed at mitigating the security threats posed by imported vehicles that incorporate certain Chinese components.

Undersecretary of Commerce for Industry and Security, Alan Estevez, made the remarks during an economic security forum, stressing the importance of multilateral cooperation with Korea and other allies to prevent potential adversaries from using technology against them.

The United States has been pushing for a regulatory measure for connected vehicle imports amid concerns that those cars with cameras, sensors, software and other components — manufactured in China — could be used to glean sensitive data about drivers and passengers, as well as U.S. infrastructure.

"We are doing some controls around that. Obviously, we've been talking to the Korean companies about what we intend to do," Estevez said during the forum in Washington as he expounded the regulatory move targeting Chinese and Russian cars.

"There will be some lead time for companies to adjust their supply chains should those companies be acquiring those types of capabilities (subject to U.S. controls)," he added.

The Korean automotive industry has been carefully watching the U.S. regulatory move as it could affect their production of connected vehicles — a point that Estevez is cognizant of.

"Connected vehicles, which is another area that has certain implications for Korea," he said.

Alan Estevez shakes hand with then Vice Minister of Trade, Industry and Energy Jang Young-jin in 2023. [YONHAP]

The official said Washington will "shortly" be putting out another notice of a proposed rule putting restrictions on the ability to import cars with the component that "manages the software ecosystem, the entertainment, software updates or the drive system of the car."

He described a connected vehicle as one that has "access to the internet, gets a software update and is managed by software and controlled accordingly." Many called connected vehicles "smart" ones, but the official highlighted a caveat: "Your car knows an awful lot about you."

"Most people in here have their phone connected to their car. Your car knows your contact list. Your car knows who you call often. Your car knows where you go most often and what route you take to get there," he said.

"As it gets the software update in, all that can be sent out. So what we are looking at is putting controls on certain components of the car and the software that manages those components."

In late April, Seoul raised the Korean automotive industry's concerns over the United States' envisioned rules to address risks from connected vehicles as the U.S. Commerce Department requested public feedback on its rule-making process.

It expressed the expectation that the United States will provide a "precise" definition of the scope of connected vehicles, as it pointed out that the current U.S. definition of the cars in question is "excessively broad."

Commenting on high bandwidth memory (HBM) chips that drive the high-end graphic processing unit (GPU), Estevez pointed out Korean companies' production capacity for those chips and underlined the need for cooperation with Korea.

Moreover, he noted, "The new battlefield is going to be won and lost by the technology that we are developing today."

"It's again important for us to have that capacity being developed and available for our own needs as well as the needs of our allies," he said, referring to the HBM chips. "We appreciate our cooperation with Korea in that space."

The undersecretary also touched on the U.S. push for export controls on quantum computing, advanced semiconductor manufacturing equipment and other technologies, which the Commerce Department's Bureau of Industry and Security unveiled last week.

"Several other like-minded countries have already announced or implemented new national controls for these items, and we anticipate that additional countries will do so," he said, referring to the latest controls.

"These controls were talked about in a multilateral way. So, we hope that Korea will soon announce that they are also putting on these controls."

In particular, the official underlined the need for collective efforts to carry out export controls.

"We have to work with our allies to protect ourselves. Doing these things in a unilateral way does not defend national security," he said.

"Fortunately, we have a great ally in doing that in Korea, really one of our stalwart allies. Certainly, the relationship between our two countries is critical, essential to ensuring global peace and security of the broader Indo-Pacific region."

BY YOON SEUNG-JIN, YONHAP [yoon.seungjin@joongang.co.kr]