South Korea is already screwed economically. The
desperation of South Korea already became apparent when it tried to
source rare earth ores from Mongolia for refining to support its
semiconductor manufacturing, to no avail. China is not going to support
the move by allowing Mongolia to ship rare earth ores to South Korea for
refining, using its Tianjin port. This was an attempt by the USA and
South Korea to exploit Mongolia's rare earth ores to counter China's
rare earth control. It is plain logic that China will never allow such
Mongolian ores to pass through its territory, when it is in the process
of countering the chip war initiated by the USA and its Chip4 alliance
countries, which South Korea is part of.
Samsung is now suffering
big time, with profits plunging so rapidly that it has been touted as
catastrophic losses quarter on quarter. Samsung and Hynix are both
anticipating further losses without Chinese rare earth elements for
their semiconductor manufacturing. They will be left in the lurch by the
USA, by following the USA to sanction China in high end chips. They
reap what they sow and deserves no sympathy.
South Korea's
economy depends for a major part on the nations semiconductor sector,
and any downturn is not going to be taken lightly. It is still early
days since China's restrictions on rare earth came into effect on lst
August. The sector probably can still fall back on stock piling earlier,
but such stocks will not last forever.
As a self conforting
narrative, the West is saying there is not much to worry abou, as it
will take only a few years for the rest of the world to set up
facilities to do it and not depend on China totally. Let us wait and
see.
China as the dominant player can influence the market by
flooding the market or restricting it. China will just let them set up
expensive facilities and plants to refine rare earth, but China could
easily kill them off by flooding the market when they come on line, with
much cheaper rare earth elements. Therefore, let us see who wants to
invest in such expensive facilities when the outlook appears so
uncertain, with returns not guaranteed. Investors are not going to throw
money into ventures with uncertain prospects. There have been
facilities being mothballed due to losses from uncompetitive pricing
resulting in their failures.
Anonymous