Two problems in the Chip War: we need China to build semiconductors, and we need China to buy them

Korean tech companies are examples of the issues we face in our semiconductor export bans with China. China is dominant in key chokepoints of the supply chain, especially high-grade polysilicon and wafers, and certain rare earth elements necessary for the production of the newest-generation chips. Korean firms also are heavily exposed by their own factory production, which is concentrated in China for the manufacture of intermediate components. Most of all, though, is the chips firms’ reliance on China as a sales channel. China is by far the biggest buyer of semiconductors, and the rest of the world simply cannot replace Chinese firms as buyers. So to comply with US and EU demands for further chip restrictions is to imperil the survival of our own companies. Resources and links: Bloomberg, US Asks South Korea to Toughen Export Curbs on China Chips Japan Times, South Korea wants U.S. ‘carrots’ for embracing China chip curbs Waferpro, China’s Dominance in the Global Silicon Supply The Global Semiconductor Supply Chain: Key Inputs Korea Times, Korean chipmakers’ reliance on Chinese raw materials deepens Bloomberg, China Warns Japan of Retaliation for Possible New Chip Curbs Rabobank, Mapping Global Supply Chains – The Case of Semiconductors Closing scene, Fuxian Lake, Yunnan province