Raw Materials: South Korea’s Dependence on China Grows

by | 12. Sep 2023 - 11:11 | Economy

In Asia’s high-tech country, the market power of the People’s Republic is becoming apparent – with potentially global repercussions.

South Korea is one of the most important locations for the global high-tech industry, from car production to the manufacturing of state-of-the-art computer chips. At the same time, the country possesses hardly any mineral resources and is dependent on the import of raw materials. This dependence is growing, as reported by The Korea Economic Daily. This involves not only battery metals such as lithium or cobalt, but also the noble gases neon, krypton, and xenon, needed for chip production. These gases are sourced from China. Background to the increased imports from the People’s Republic is the war between Russia and Ukraine, both important producers of the gases, according to the newspaper. Even small disruptions in supply could severely affect the South Korean semiconductor industry and thus the global supply. The country is the leader in memory chips, with a market share of nearly 57 percent (2020).

Experts do not expect China to stop exporting neon, krypton, or xenon or even use them as a means of exerting pressure, but export restrictions like those on gallium and germanium are possible. The situation is exacerbated by what the German Federal Institute for Geosciences and Natural Resources says is the opaque market situation for noble gases. This year, the federal agency presented a study on the supply situation for helium, which also belongs to this group of elements, and reported on bottlenecks that are flying largely under the media radar despite their potential impact.

Photo: iStock/kamponwarit