Opinion | Biden Is Caught In a Semiconductor Crisis. Does South Korea Have the Answer?

When Moon Jae-in, South Korea’s president, meets with President Biden at the White House on Friday, many will watch with North Korea on their minds. But Mr. Biden may be consumed with something else. Demand for electronics during the coronavirus pandemic and concerns over the global supply in the U.S.-China “trade war” have caused a shortage of semiconductors, those magical bits of silicon or gallium arsenide that power nearly every digital aspect of our lives.

The United States has long relied on East Asia to supplement Intel’s production of semiconductors, and the region has risen in tandem with the sector at great human and ecological cost. On Thursday, Commerce Secretary Gina Raimondo hosted a virtual summit with Asian and U.S. semiconductor makers. Invitees included Samsung, the company responsible for nearly one-fifth of South Korea’s G.D.P. and one of the top two manufacturers of semiconductors; the Seoul-based SK Group is also in the top five. Both are among South Korea’s chaebols, the heavily state-subsidized, family-owned corporate conglomerates that have dominated the country’s economy since the 1960s.

Given the apparent desperation of U.S. businesses for more microprocessors — the chief executive of Ford blamed the shortage for the halving of his company’s production in the second quarter of this year — the administration will most likely broker whatever trade it can. But in looking to South Korean chaebols to meet the nation’s needs, Mr. Biden may indirectly bolster a handful of corporations with a terrible grip on the country’s economy.

According to the logic of conglomerated South Korea, a few large firms control most industries and determine both supply and demand, funneling wealth to the top. The chaebols are inescapable: As the novelist Kim Young-ha has written, an average South Korean could begin her day in a Samsung-built apartment, watch a video on a Samsung smartphone and get informed by a news broadcast on a Samsung TV, all paid for on a Samsung credit card.

Yet these ubiquitous corporations have done little to improve the lives of most South Koreans. Today, chaebols employ only about one-tenth of Korean workers and are drivers of social inequality. Decades ago, they began to move much of their industrial operations abroad, where they can pay workers less; at home, they continue to project a C-suite fantasy of white-collar wealth that few can attain. Meanwhile, South Korea has among the O.E.C.D.’s highest rates of poverty; the rate for the nation’s seniors tops the list. Koreans also work some of the longest hours in the world but experience little social mobility.

When Mr. Moon became president of South Korea in 2017, he pledged to undo the legacy of President Park Geun-hye, his corrupt, impeached predecessor, and that of her father, the military autocrat Park Chung-hee, whose governing blueprint throughout the 1960s and ’70s involved gross abuses of human rights and the introduction of the chaebol business model. Mr. Moon vowed early on to curb the dominance of the chaebols, improve wages, increase welfare benefits and boost small and medium-sized businesses. He succeeded in raising the minimum wage, expanding child-care credits and pensions for seniors and establishing a government office to support innovation. Yet he has been unable or unwilling to cross the chaebols.

Conglomerates like Samsung, Hyundai, Hanjin, Lotte and LG once helped many workers enter the middle class and made South Korea a booming “East Asian tiger.” But the chaebols also embraced offshoring, outsourcing and price-gouging while lobbying for closed markets. Their executives have amassed billions speculating in real estate and transferring wealth to relatives: The South Korean version of the Asian financial crisis of 1997 was spurred in part by chaebol malfeasance.

Why, then, does the political class still pay them tribute? In 2018, just months after Samsung boss Lee Jae-yong was released from prison on a suspended sentence, Mr. Moon took him on a diplomatic trip to Pyongyang, hoping to parade the benefits of capitalism before North Koreans. Mr. Lee was put back in prison after a remand, but he has since hired a former legal secretary of Mr. Moon to represent him — most likely in an application for a presidential pardon. A growing number of South Korean politicians have preemptively urged the president to exercise mercy for the sake of the semiconductor industry. Indeed, throughout the Covid-induced economic downturn, Mr. Moon has looked to the chaebols as a desert traveler would an oasis. “We will safeguard our national interests by using the current semiconductor boom as an opportunity for a new leap forward,” he said in a speech earlier this month.

For people in the U.S., the chaebols may recall Amazon and other tech conglomerates that dominate not only computing and retail but also data storage, entertainment, media and transportation — and shape worker’s rights. (One key difference: Some of the chaebols were eventually forced to negotiate with South Korea’s unions, thanks to years of militant labor actions.) Earlier this month, Amazon announced that its profits for the first quarter of 2021 more than tripled those of the same period last year. A dominant part of its operation was Amazon Marketplace, which lets small and medium-sized businesses pay to sell their wares on Amazon and use Amazon’s logistics network — but renders them vulnerable to being deleted from the platform or having Amazon use their data to create competing products. (In an email, an Amazon spokesman said, “We strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.”)

This, too, is reminiscent of the chaebols: With Amazon so radically reshaping the U.S. economy, it constrains the functioning — and imagination — of countless other enterprises. Independent businesses come to exist and succeed only in relation to Jeff Bezos’s creation.

Amid the semiconductor crisis, the American chaebols of big tech are looking to protect their interests from foreign competition. Amazon, Apple, Google and Intel recently announced the formation of the Semiconductors in America Coalition, a lobbying group seeking $50 billion in federal subsidies for chipmakers; on Tuesday, Senator Charles Schumer of New York introduced a bipartisan proposal for $52 billion. Though Mr. Biden has criticized Amazon for labor abuses and vowed to confront monopolies, he now faces a trap of corporate dependence — the same conundrum that has ensnared South Korea.

Mr. Moon’s trip to the White House offers both the U.S. and South Korea a chance to re-evaluate the monopolistic, conglomerated model of economic development. If the Biden administration should fail to follow through with its promises to bust the U.S.’s own chaebol economy, the president’s term could go the way of Mr. Moon’s: animated by the hopes of a struggling majority, yet stymied by a status-quo deference to the rich.

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