US White House flags S. Korea's semiconductor belt as potential tariff evasion route

A recent US White House report has flagged South Korea's Gyeonggi Province semiconductor belt as a potential "transit point" for integrated circuits, raising concerns about its role in Chinese companies bypassing American tariffs. The report, which featured a "Trojan Horse" motif, suggests that the large semiconductor manufacturing complexes in Yongin, Hwaseong, Pyeongtaek, and Icheon could be exploited.

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South Korea's Gyeonggi Province semiconductor belt can serve as a 'transit point' for integrated circuits (semiconductors).

Jo Eui-joon, CEO of SanktionLab, a company specializing in screening sanctions and export controls, described the mention of a specific region in South Korea as a "clear advance warning." While no illegal activity was identified, he stated it shows the US views Gyeonggi's semiconductor supply chain as a target for transshipment and origin verification. South Korea, reliant on advanced manufacturing exports, is caught in a delicate balancing act amid escalating US-China trade competition and tightening global supply chain regulations.

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This is the first time a specific region in our country has been mentioned in a US White House report. While no illegal activities were uncovered, it is a clear advance warning that the US recognizes Gyeonggi's semiconductor supply chain as a potential target for transshipment and origin verification.

Jo further illustrated the risks by referencing a Ukrainian intelligence document indicating South Korean memory semiconductors were found in Russian drones. He emphasized that many of South Korea's key manufactured goods, though intended for civilian use, are "dual-use items" with potential military applications. This reality means the US could impose export controls or sanctions, even if South Korea did not directly export chips to Russia.

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South Korea's main manufactured products are for civilian use but are effectively 'dual-use items' that can be repurposed for military use. Even if we don't directly export chips to Russia, the US, particularly under the Trump administration, could potentially impose export controls or sanctions at any time.

The article points to a lack of robust supply chain management by both South Korean companies and the government. A notable example cited is the US Congress uncovering Chinese seafood, produced with North Korean forced labor, being sold through South Korean platforms like Coupang and Lotte Mart. Jo stressed that for an export-driven economy like South Korea, screening infrastructure is essential to identify and mitigate export control and sanctions risks, thereby avoiding significant fines and penalties from the US government.

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For South Korea, which relies on exports, screening infrastructure capable of pre-screening export control and sanctions risks is essential to avoid astronomical fines and penalties from the US government.