Understanding Fab 4: terminologies around ‘anti-China Chip 4 Alliance' 

Woo Jung Yeop 

Research Fellow, 

The Sejong Institute

(woo@sejong.org)​ 

Recently, the so-called "Chip 4 Alliance" has been widely used in Korean media. The problem is that the word "Chip 4" or "Chip 4 Alliance" is used only by the Korean media. It is a concept that does not exist. The bigger problem is that it proceeds with the logic that China will eventually retaliate against South Korea if South Korea “joins” the “Chip 4 Alliance” under the premise of an “anti-China policy alliance” that seeks and implements semiconductor policies with the U.S., Japan, and Taiwan. 

Although it is natural to put national interests first to the extent that it does not harm international norms and order, it does not seem to be a normal process of policy discussion to first consider whether China will retaliate even before determining whether the policy is for South Korea’s national interest. It is necessary to first understand what the FAB4, which is called the "Chip 4 Alliance" is, evaluate and analyze how it affects Korea’s national interests, and whether there is a reason for China’s opposition, and judge the value accordingly. 

Foremost, it is necessary to discuss the direction of the Yoon Seok-yeol administration’s foreign policy, which is the background of controversy over the recent Chip 4 alliance and the U.S. House of Representatives Speaker Pelosi’s visit to South Korea. Although the 100th day of the inauguration of the new government in South Korea is approaching, domestic discussions are still used to talking about how China will react to South Korea's foreign and security policies first. The new administration's foreign and security policies are lumped together and are called "anti-China policies," adding to the burden of public opinion. It is even more misleading to explain the part of Korea's foreign policy related to China in English as "anti-China policy." This is because the meaning of "anti-China" in the Korean word "anti-China opinion" and the meaning of anti-China in “anti-China policy” are different in English.

The term "anti-China" in the word “anti-China opinion,” which we easily use in the media, can be interpreted as a degree of rejection of China's behavior. “Anti-China” in "anti-China policy" has a more active meaning of isolating and antagonizing China or taking policies that are contrary to China's interests. There may be anti-U.S. and anti-Japan opinions, but the Korean government does not use policies under the name of anti-U.S. or anti-Japanese policies. Anti-China opinion may exist, but the government is not in a situation to come up with an anti-China policy as a nation. Even the Biden administration, which has a very hard-line stance on China, draws a line on Pelosi's visit to Taiwan, and the U.S. leading media criticizes Pelosi's visit to Taiwan may be on the same level.

The new South Korean government's stance on China is to respect each other, but to be confident. Such a policy stance has nothing to do with "anti-China." Considering the importance of economic relations with China and exchanges at the private level such as Korean residents and foreign students, there is no reason for Korea to adopt an anti-China policy. However, the government's position is to prevent the possibility of unfair or illegal intervention by foreign countries in the process of promoting policies for the sake of our national interests and security. This is not an anti-China policy that isolates or antagonizes China, but a principle that determines the direction of foreign policy based on Korea's national interests.

Against this background, recent discussions on FAB4 are analyzed. The FAB4 is said to be aiming for a meeting that is no different from the many discussions that South Korea has already conducted with the United States and major countries and plans to hold in the future. The plan is to discuss how cooperation between major semiconductor manufacturers, which have experienced international supply chain instability caused by COVID-19, will be effective for future supply and demand of semiconductors. Therefore, the main agenda items are R&D cooperation, human resource development related to semiconductor production, and discussion on measures to stabilize the supply chain, not the consultative body seeking measures to exclude certain countries. 

The U.S. measures to control exports of semiconductors to China are sufficient if it takes its own export control method, such as ZTE in 2018 and Huawei in 2019. Also, it is possible for the U.S. to restrict manufacturing equipment exports to China, a major semiconductor manufacturing equipment country like the Netherlands and Japan. In this way, the FAB4 can be understood to be aimed at industrial development and development rather than protection and control of semiconductor technology, and the U.S. government says so. Instead of forming an exclusive organization called the "Chip 4 Alliance," discussions should be held for the common good. In addition, major semiconductor manufacturers such as Korea, Japan, and Taiwan are already fiercely competing depending on the interests of each country, but it is almost impossible to push for an alliance to compromise their interests for a specific purpose. The goal will be to conclude the discussion to the extent that we can talk about what we can cooperate with under intense competition.

It is unreasonable to take China's opposition and retaliation as a matter of course, since such discussions at FAB4 with the U.S., Japan and Taiwan are not intended to isolate China. South Korea still wants China to export semiconductors, and so does Taiwan. The same is true of the Netherlands and Japan, which export semiconductor equipment. As it is highly likely to be affected by the U.S. export controls, it is essential for South Korea to participate in discussions, compromises, and come up with solutions.

Since China began producing semiconductors, the technology gap between Korea and China has narrowed sharply every year. In particular, China's technological development is rapidly emerging in the memory sector, which Korea has strong points in. What we need to worry about is not what we will do if China resists cooperation with the U.S. and major semiconductor manufacturers and is unable to export our semiconductors to China. Rather, what we need to worry about is the situation in which China is catching up with and overtaking our technology. We should be more concerned about the situation in which semiconductor exports to China will not be possible due to China's retaliation, but due to the narrowing of the technology gap with China. We already have experience of being caught up by China in many industries that we had strengths in, such as shipbuilding and display.

If this is the case, it would be in our national interest to maintain the technology gap with China through cooperation with major semiconductor manufacturers and technology holders, and to maintain our market dominance accordingly. We need more careful and serious discussions than ever before, as false frames of discussion, misunderstandings about policies, and so on will eventually lead to negative perceptions of policies, which will eventually hurt us.

For reference, Fab4 stands for fabrications, which means semiconductor manufacturing plants, and means the four major countries of semiconductor manufacturing, but when you search Fab4, there is no such thing as a semiconductor alliance, and you can only search for stories about the Beatles as Fab 4 is the nickname of the Beatles (Fabulous 4). 

※ This article is written based on the author’s personal opinions and does not reflect the views of the Sejong Institute. ​