▲ This photo, taken June 21, 2023, shows Daniel Kritenbrink, then assistant secretary of state for East Asian and Pacific affairs, speaking to the press during a visit to the foreign ministry in Seoul. (Yonhap)

ex-US official-S Korea

Ex-U.S. official calls for diversification strategy for S. Korea's chip sector amid Hormuz disruptions

By Song Sang-ho

WASHINGTON, June 30 (Yonhap) -- A former senior U.S. official on Tuesday stressed the need for South Korea to diversify its specialty gas supply for its chipmaking industry, noting that a prolonged disruption to shipping through the Strait of Hormuz could weigh on the country's key growth engine.

Daniel Kritenbrink, former assistant secretary of state from 2021-25, made the remarks during an online press briefing on a report that the Asia Group, a U.S.-based advisory firm, released Monday to explain Asia's exposure to the disruptions in the strait, a crucial route for oil, natural gas and other shipments.

The report said the continued disruptions in the strait, caused by the U.S.-Israeli war against Iran, would affect South Korean chipmakers, which it said are the world's largest helium consumers and source over 65 percent of their supply from Qatar.

"I think many of us weren't completely aware of just how reliant South Korea and really much of the region are on helium for the chipmaking industry, and much of that helium has been sourced from the Middle East, historically," Kritenbrink, a partner at the Asia Group, said.

"I think you've seen Korea and other key countries in the chip sector really work hard to diversify their sources of helium. I think diversification is the long-term name in the game. I don't think countries like South Korea really have any other choice."

Kritenbrink described the semiconductor sector as both South Korea's "shield" and "vulnerability."

"Chips are carrying much of Korea's growth. We read all about that, but the sector also depends on stable electricity, specialty gases and predictable logistics," he said.

"Our report highlights Korea's dependence on helium from Qatar, for example, making prolonged disruption a direct risk to Korea's most important growth engine."

The Asia Group report pointed out that in South Korea, government intervention and aggressive diversification efforts, combined with leading firms' willingness to pay premiums for inputs, have contained immediate supply challenges stemming from the Middle East conflict.

But it said a prolonged disruption will force the companies to lock in expensive long-term contracts or divert research and development capital toward supply security -- opportunity costs that compound over time for Korea's flagship technology sector.

(END)

[ⓒ K-VIBE. 무단전재-재배포 금지]