‘The next era of humanity’s technological development’: U.S. and its Asian allies get serious about semiconductors

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TOKYO — As U.S. President Joe Biden visits Japan and South Korea, the three countries are looking for common ground on the world stage. One place they’re finding it is semiconductors.

A first stop for Biden on his first swing through Asia as president was a Samsung factory in South Korea.

“These little chips, only a few nanometers thick, are the key to propelling us into the next era of humanity’s technological development,” Biden said on Friday.

The new president of South Korea, Yoon Suk-yeol, said over the weekend that he and Biden “visited what can be described as the ‘global epicenter’ of cutting-edge semiconductor industry. There, I was able to feel the strength of our economic and technology alliance.”

Chips are integral to everything from automobiles to home appliances, and they’ll play an essential role in the development of artificial intelligence and quantum technologies. Leaders from the three countries have avoided mentioning China when it comes to semiconductors, but export controls are on the agenda as well.

“The main thing of interest to investors [from Biden’s trip to Asia] might be what they say about supply chains and semiconductors and how much they align on export controls of sensitive technologies to China and investment in the U.S.,” said Michael J. Green, senior vice president for Asia and Japan chair at the Center for Strategic and International Studies.

U.S. Commerce Secretary Gina Raimondo, center, met on Monday in Tokyo with Japan’s trade minister, Koichi Hagiuda. The two democracies are working to shore up their alliance against a backdrop of economic uncertainty around the world. U.S. Ambassador to Japan Rahm Emanuel is at left.
Ted Kemp | CNBC

On Monday, U.S. Commerce Secretary Gina Raimondo met with her Japanese counterpart, Koichi Hagiuda, in Tokyo. The two discussed “cooperation in fields such as semiconductors and export control,” according to a CNBC translation of a statement from the Japanese Ministry of Economy, Trade and Industry.

Japan and South Korea are long-standing American allies, and both are technology powerhouses. But as of 2020, the two countries also have bigger export relationships with China than they do with the U.S.

U.S. politics

To play a central role in the geopolitics around semiconductors, the Biden administration recognizes that the United States needs to boost its economic relevance in Asia.

While in Tokyo, Biden is expected to outline details of the Indo-Pacific Economic Framework, an agreement that will focus on shared standards around digital technology and supply chains.

The IPEF will not be a free trade deal, however.

Domestically, Biden has to deal with American voters on both the left and right who are suspicious of trade agreements.

The United States pioneered what was expected to be a massive free trade agreement, the Trans-Pacific Partnership or TPP, only to see it squashed by former President Donald Trump as soon as he entered office in 2017.

The TPP included twelve nations in Asia-Pacific, North America and South America.

Trump’s rival for the presidency, Hillary Clinton, said on the campaign trail that she would cancel the TPP as well, despite personally working on it as secretary of State under President Barack Obama.

After the United States undercut the TPP by withdrawing unilaterally, the remaining 11 nations proceeded to form the Comprehensive and Progressive Trans-Pacific Partnership — which China has formally applied to enter.

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