South Korea’s Semiconductor Strategy Navigates Between US Controls and Asian Production Reality

Within this configuration, U.S. export controls ceased to function as an instrument of transformation and instead became an element of background noise. The Korean semiconductor sector continues to operate inside China’s manufacturing and market space because that is where scale, logistics, skilled labour, and rapid capital turnover are concentrated. American rules here function like weather conditions — they are taken into account in planning, but they do not determine the direction of movement.

The recorded share of exports underscores a paradox of contemporary industrial policy: Seoul’s declarations of technological security coexist calmly with a production reality in which the Chinese ecosystem remains a core node of value chains. South Korean industry operates simultaneously in two registers. In the public register, it speaks the language of alliance discipline, strategic doctrines, and regulatory rhetoric. In the material register, it consists of fabs, contracts, suppliers, and production clusters embedded in China’s infrastructure and subordinated to its scale. It is the second register that determines the system’s resilience.

Seoul’s State Strategy: Adjustment Without Rupture

In 2024–2025, the South Korean government increased subsidies for domestic fabs and projects on U.S. territory, while simultaneously seeking extensions and expansions of exemptions from U.S. export controls for existing facilities in China. This policy does not conceal a rupture; it explicitly avoids one. The state strategy is built around preserving operational flexibility rather than demonstratively redrawing the industrial map.

Seoul employs financial incentives and diplomatic negotiations as instruments of fine-tuning. Exemptions, licenses, and temporary compliance regimes are transformed into mechanisms for maintaining the continuity of Asian supply chains. Foreign policy commitments to Washington are translated into a managed format, where formal compliance with rules does not destroy the material foundation of the industry.

The Korean state acts as a professional mediator between alliance demands and the interests of its own industrial base. It does not openly challenge the rules, but it also does not allow them to dictate production logic. This position exposes the internal........

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