Supply Chain Double Squeeze
공급망 이중 제약
A structural condition in which Korean semiconductor and battery firms are simultaneously caught between US equipment and technology export controls on one side and Chinese raw material and intermediate goods export controls on the other. Samsung and SK Hynix require annual US Commerce Department approval to bring American-made equipment into their Chinese fabs, while battery makers depend on China for roughly 90% of precursor materials yet face subsidy exclusion under the IRA's Foreign Entity of Concern (FEOC) clause if they use Chinese-sourced inputs. This condition (where firms lose regardless of which constraint they prioritize) is a signature feature of the US–China supply chain weaponization competition, intensifying after the Biden administration's 2022 semiconductor export controls and China's 2023 gallium and germanium export restrictions.
In depth
Origins and Structure
The supply chain double squeeze emerged in the 2020s as US–China strategic competition weaponized supply chain chokepoints. The United States controls semiconductor equipment, design software, and export licensing; China dominates global supply of rare earths, gallium, germanium, precursors, and other critical materials and intermediates. Advanced manufacturing firms in Korea, Taiwan, and Japan caught between them lose operational autonomy at the precise points where the two regulatory regimes collide.
The Korean Semiconductor Case
Samsung and SK Hynix produce roughly 40% of their NAND flash and 50% of their DRAM, respectively, at their Xi'an and Wuxi fabs in China. The Biden administration granted a one-year Validated End-User (VEU) waiver in 2022; this was revoked in August 2025, replaced by annual individual licensing. The result: Korean firms now require a third country's government approval to replace or upgrade equipment in their own factories, a structural sovereignty gap.
Batteries: The IRA–FEOC Paradox
The double squeeze on Korea's three major battery makers (LG Energy Solution, SK On, Samsung SDI) is even starker. Precursors account for roughly 70% of cathode material costs and Korea sources roughly 90% of them from China. Yet the IRA's FEOC clause excludes EVs using components or minerals from entities with 25% or more Chinese ownership from the $7,500 per-vehicle tax credit. Severing the China link causes costs to surge and destroys competitiveness; maintaining it forfeits the subsidy. Either path produces losses.
Theoretical Implications
Lenin's analysis in Imperialism: The Highest Stage of Capitalism of capital export and the division of the world reappears in 21st-century form as control over supply chains, technology licensing, and intermediate goods dependency. Where 19th-century imperialism secured raw materials and markets through direct colonial rule, its 21st-century successor constrains competitors' industrial capacity itself through the strategic control of chokepoints.
Sources
- periplo.us Rodger Baker (July 2026): 'Korea is squeezed from both sides of the same supply chain. U.S. equipment and export controls, coupled with China's upstream dominance, sandwich Korean ambitions'
- uscc.gov U.S.-China Economic and Security Review Commission 2025 Annual Report documenting China's weaponization of supply chain chokepoints across critical minerals, semiconductors, and pharmaceuticals
- link.springer.com Bu (2024), 'Can de-risking avert supply chain precarity in the face of China-U.S. geopolitical tensions?', International Cybersecurity Law Review, analyzing the structural squeeze on allied semiconductor firms