The White House is enlisting allies in its efforts to rebuild U.S. manufacturing capacity in the high-tech sector. South Korean semiconductor makers are playing along publicly, but privately they are supplying dual-purpose technology to Russia circumventing CAATSA sanctions.
The gallium arsenide components of the phased array radar used by the Su-57, MiG-35, MiG-29M2, Su-30 and Su-35 are still produced in South Korea. Not long ago, the exporter Seoul Semiconductor Corporation of South Korea, under pressure from the United States, has announced that it would stop selling high-performance gallium arsenide semiconductor equipment to Russia. The export ban will affect the production of the Su-57’s radar and other types of equipment such as Su-35’s Irbis-E radar.
Seoul Semiconductor has issued a temporary restriction on the export of Gallium Arsenide and hydrogen fluoride to Russia’s NIIP Design Bureau causing a significant financial setbacks to Sukhoi Design Bureau, which recently lost three major fighter jets contracts from Algeria, Egypt and Indonesia.
After the collapse of the USSR, the production of all electronic equipment was significantly reduced. Russian Federation never invested in modern electronics such as microprocessor, semiconductor, LED and LCD screens. Even some types of sophisticated household equipment were not being produced such as televisions and appliances.
In 2000s and 2010s, the collapse of Russian economy led to collapse of factories forced Russia to merge aircraft manufacturers under single organization named United Aircraft Corporation (UAC). Russia starts importing electronics and raw materials from Europe and Asia.
South Korean Seoul Semiconductor and Samsung Electronics are privately supplying dual-purpose technology to Russia.
Both gallium nitride and gallium arsenide are dual-purpose technology produced in Israel, Taiwan, Japan, Europe and the U.S.
Gallium nitride and gallium arsenide are raw materials to produce radar and electronics for military applications.
The Countering America’s Adversaries Through Sanctions Act is a United States federal law that imposed sanctions on Iran, North Korea, and Russia. The Senate passed the bill on 27 July 2017 to not allow military transactions from American allies with Russian Federation.
Japan recently revoked preferential treatment offered to South Korea for semiconductor raw material exports. This export curb surrounds three materials that are crucial for fabrication, and making matters worse, the materials can not be stored without a loss in quality or prohibitive costs. Therefore, South Korean companies are in a bind as new export conditions will require a 90 day approval period from the Japanese Government. Now, an unlikely savior for these companies has emerged. Take a look below for more details.
In terms of the total cost of hydrogen fluoride imports to South Korean businesses between January and May of this year, those sourced in China accounted for the largest share at 46.3%, followed by those sourced in Japan at 43.9%, in Taiwan at 9.7%, and in India at 0.1%.
The materials that will cease to benefit from expedited export to South Korea from Japan are Photoresist, Hydrogen Fluoride and Fluorinated Polyamide. The three are used in the different stages of semiconductor fabrication. 43.9% of South Korea’s Hydrogen Fluoride imports were from Japan for the first six months of this year. While the figure is down considerably from the past, South Korea is still struggling to develop a local industry for the material due to high barriers of entry for small companies.
Now we’re learning that South Korea might make up for the drop in Hydrogen Fluoride imports from Japan by importing the etching gas from Russia. Etching gas plays an essential role in semiconductor fabrication by letting manufacturers remove undesired silicon layers during the microfabrication process.
According to ETnews, a South Korean government official commented, “When it comes to the competitive edge of hydrogen fluoride, Russia is either equal or superior to Japan.” Additionally, a spokesperson for South Korea’s Blue House commented, “We absolutely need to put in the effort to reduce dependence on a particular country, and there is a need to expand partnership with Russia and Germany that have an advantage in the chemical industry, especially.”
However, this doesn’t mean that South Korea’s plans to diversify away from Japan to Russia are set in stone. Another government representative elaborated to the news, “Although no one mentioned during the meeting that Russia is offering to supply hydrogen fluoride to South Korean businesses, we did discuss diversifying supply network of materials and a possibility of working with Russian Government. Although it is unclear whether Russia will supply hydrogen fluoride, South Korean businesses will look to change their supply lines if Russia supplies hydrogen fluoride and Japan cuts off the supply of hydrogen fluoride.”
South Korea also manufacture Russian origin Sputnik V vaccine in South Korea as the Russian Federation does have the technology to manufacture Sputnik V. South Korea’s Huons Global Co Ltd will lead a consortium to produce 100 million doses of Russia’s Sputnik V COVID-19 vaccine per month, as Moscow seeks to increase production globally to meet rising demand.
As the Russian shipbuilding Industry crumbled to its knees, South Korea came to its aid. Russia’s LNG supplies to South Korea, shipbuilding industries in Russia and South Korea) and examples of failed deals (the sale of Hyundai’s idle factory near Vladivostok, the DSME’s withdrawal from an investment agreement with Zvezda shipyard). Beyond that, the problem of sanctions still persists – not only are sanctions against North Korea affecting any form of trilateral cooperation but there are also the EU and U.S. sanctions imposed on Russian companies and businessmen, which make South Korean investors reluctant to make deals with Russia.
© 2022, GDC. © GDC and www.globaldefensecorp.com. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to www.globaldefensecorp.com with appropriate and specific direction to the original content.
Be the first to comment