Seoul hints noninterference amid US and China pressure on Huawei front

2019.06.10 11:41:03 | 2019.06.10 14:50:58

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The South Korean government suggested noninterference as local companies – primarily chipmakers – come under blunt pressure from both Washington and Beijing to take their side in the technology war involving Huawei Technologies.

“There are areas where companies need to make their own decisions,” said Yoon Jong-won, senior presidential secretary for economic affairs, in a briefing on Friday, when asked on the government response to mounting pressure from Washington to join its sanction against Huawei, the world’s biggest telecom gear maker.

“But on wireless security, the government must be thorough in its management,” he said.

His comment came just days after the U.S. Ambassador to South Korea Harry Harris attended an IT forum in Seoul to issue a nuanced warning against using Huawei equipment, saying it was important to choose “trusted” suppliers for the 5G network.

The local industry finds itself in a sticky bind on top of the chip business downturn and worsening economic conditions as the world’s two largest technology markets turn to intimidation to strengthen their positions amid signs of a protracted trade war.

Unlike the U.S., Korea cannot easily slap sanctions on security grounds as Huawei gears make up less than 10 percent of Korea’s 5G network and since the country has entirely separate wireless platforms for commercial and security uses.

The European Union, meanwhile, relies on Huawei for 40 percent of all telecom equipment in the region, and some Southeast Asian countries 70 percent.

China has been blunter in its pressure on Korean enterprises.

According to reports from the New York Times and the Wall Street Journal, China’s National Development and Reform Commission last week summoned more than a dozen major names in the tech industry, including South Korean chipmakers Samsung Electronics and SK Hynix, to warn them that they could face dire consequences if they cooperate with the U.S. trade restrictions against China and Huawei. Among the companies brought in were Microsoft, Dell Technologies, Intel, Qualcomm, Cisco Systems, Nokia and ARM Holdings.

Korean companies cannot shrug off the warning as they have bore the brunt of Beijing`s ruthless economic retaliation when Seoul installed a U.S. antimissile system for protection against North Korean missiles.

Korea’s fifth-largest conglomerate Lotte Group, which handed over its land to host the system, had to close down its retail business in China due to growing hostility against Korean companies in the country. Korean cars and smartphones as well as other brands never entirely recovered from the nonofficial sanction.

China is Korea’s biggest trading partner, accounting for nearly 30 percent of the country’s exports last year. Exports to the U.S., Korea’s crucial security ally, made up 12 percent. Huawei last year bought 12 trillion won ($10 billion) worth of Korean components.

By Oh Soo-hyun and Kim Hyo-jin

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