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Investigative Report on the US Semiconductor and Battery Supply Chains: Key Points and Implications

Author Lee, Jun; Kyung, Heekwon; Lee, Sungkyung; Lee, Goeun Date 2021.07.05 Issue No
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○On June 4, 2021, the U.S. White House released a report assessing its supply chains in four critical areas: semiconductors, batteries, pharmaceuticals, and rare-earth minerals. The report included policy recommendations for securing competitiveness in the above sectors.


The report’s authors found that domestic supply chains were weakening, especially in the assembly, testing, and packaging (ATP) processes and critical materials. And given these deficiencies, the authors argued that it is necessary to build more advanced production facilities to secure industrial hegemony in the semiconductor sector.


The U.S. Department of Commerce recommended seven policy actions to secure the semiconductor supply chain. These include: the expedient execution of the CHIPS for America Act, building the necessary infrastructure to attract semiconductor production facilities, reform to the visa system to attract foreign talent, and technology protection through cooperation with allies.


The review found the battery supply chain to lack an independent foundation for production, with particular weaknesses in raw materials mining, refining and manufacturing.


The U.S. Department of Energy recommended four policy approaches to address these shortfalls. The recommendations include: using government purchasing power to beget domestic supply in the transportation and utilities sector, promoting investment and recycling tailored to minerals, providing subsidies and tax credits, and utilizing other investment incentives to strengthen the domestic supply chain for batteries.


Since American tech policy can have significant influence on Korea’s strategic industries, Korea needs to prepare precise and effective counterstrategies.


The policies proposed in the report may be either threats or opportunities, and we must simultaneously approach competition and cooperation in a strategic way. We must thoroughly evaluate the level of potential risk to the structure of our supply chain, the stages of which are located in neighboring countries including China, Japan, and Taiwan. Through this risk assessment, we need to develop industry-specific strategies to strengthen the supply chain. We must build a governance and legislative structure that can comprehensively handle supply chain issues from both an economic and a security perspective.