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(Reuters/Yonhap)

The US has requested that the South Korean government not allow Samsung Electronics or SK Hynix to make up for shortfalls if the Chinese government moves to sanction the US memory company Micron, according to news reports.

Coming just ahead of the two sides’ summit, the request appears likely to pose a major burden on Seoul and South Korean companies, as it forces South Korea into a role at the center of the US’ strategic rivalry with China.

The UK-based Financial Times published a report Sunday citing four sources acquainted with discussions between the White House and South Korean presidential office as saying Washington had issued the request to Seoul ahead of South Korean President Yoon Suk-yeol’s visit this week.

On March 31, the Cyberspace Administration of China announced that it was launching a cybersecurity review of Micron products to “ensure the security of the supply chain of critical information infrastructures.”

Possessing a 19.2% market share last year according to the UK research group Omdia, Micron is one of the three dominant presences in the global DRAM memory semiconductor market after Samsung Electronics (38.7%) and SK Hynix (20.4%). The decision can be seen as China’s way of hitting back against a US Commerce Department ban on exports of advanced semiconductors and semiconductor equipment to China last October.

If China does suspend purchasing of Micron products, it would be the first example of retaliation against a US company in response to pressure from Washington. It would also deal a major blow to Micron, with mainland China and Hong Kong accounting for 25% of its US$30.8 billion in sales last year.

The US is urging the South Korean government to encourage its companies not to fill the shortfalls in China if Beijing does suspend Micron purchases.

Explaining the significance of the request, one source said the US wanted to “ensure that China is not going to be able to use Micron as a lever to influence or effect US policy.”

The Financial Times also observed that the White House demand was communicated at a “sensitive time” with Yoon scheduled to arrive in Washington on Monday for a state visit. This places Yoon in an awkward position with the first example of the US demanding an ally enlist its companies to play a role in coordinating with its response to China, the newspaper added.

Yoon had been hoping to use the visit to elicit more explicit security guarantees and favorable economic measures from the US. Now he finds himself in a scenario where a visit intended to reduce certain burdens only leaves South Korea saddled with more.

The US has been working to shut China out of global supply chains in semiconductors and other advanced industries. A symbolic step in this came last October when it banned exports of advanced semiconductors and manufacturing equipment to China, deeming exports of the technology a “threat to national security.”

In December, it placed China’s biggest memory semiconductor company, Yangtze Memory Technologies, on an export control list, which barred other parties from providing technology to the business without US government permission.

In late March, it included “guardrail” provisions for benefits through its CHIPS and Science Act (enacted last August) — which provides subsidies to semiconductor companies investing in the US — stipulating that companies building semiconductor production facilities in the US cannot expand their production in China by more than 5% over a 10-year period if they receive a subsidy.

All these measures place significant constraints on the business activities of Samsung Electronics and SK Hynix, both of which have large-scale production facilities in China.

The US has also gone a step further in preventing South Korean companies from selling semiconductors that US companies had been selling without issues — in what may be seen as a violation of business freedoms and economic sovereignty.

For now, the Samsung Electronics and SK Hynix production facilities in China have been granted an exemption from the US semiconductor manufacturing equipment ban until October of this year. With the US holding the leverage, the South Korean companies could come under major pressure if Micron is sanctioned and the US insists that they cannot increase their sales in China.

China has voiced its vehement objections.

On Monday, Chinese Foreign Ministry spokesperson Mao Ning said, “To maintain its hegemony and seek selfish interest, the US has pushed for decoupling and severing supply chains and even coerced its allies to join the campaign to contain China.”

“Such self-serving practice will not be well-received. China firmly opposes it,” she added.

By Lee Bon-young, Washington correspondent

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