China's Chip Self-Reliance Stalls Amid Talent Drain Allegations; Korean Battery Tech Proven

The Chinese government is pushing for faster chip self-reliance by mobilizing massive funding and its domestic market to nurture CXMT. Recently, after its listing, CXMT drew enormous capital inflows and its share price performed quite strongly. However, allegations have been raised that in this process, Chinese companies disguised themselves as Taiwanese or third-country firms in an attempt to lure away Taiwan's semiconductor and AI talent.

The reason China is fixated on semiconductors is that its national survival is tied to the AI era. As the United States restricts exports of chip technology, China faces a 'chokepoint' situation where its entire industrial base could be paralyzed. President Xi Jinping has stressed 'new quality productive forces' and is pushing chip self-reliance, because semiconductors are an essential common foundation for driving advanced science and technology such as AI, 6G, and military equipment.

Of these, solar has taken over 80% of the market, and electric vehicles and batteries have also shown results, but the semiconductor sector remains sluggish.

From China's standpoint, failure to achieve chip self-reliance is seen as a situation in which huge amounts of foreign currency flow abroad.

In the first half of this year, BYD's electric vehicle sales fell 20.77% and its market share dropped 5 percentage points. In contrast, Hyundai Motor Group's sales grew 25.3%, showing momentum. BYD's slump is analyzed as the combined effect of intense price competition in China, tariffs from the European Union and the United States, and battery fire problems. Hyundai has standardized technology through EGMP, a global common platform, so it is hard for it to surpass BYD right away, but it is expected to gain considerable competitiveness in overseas markets over the long term. Preference for Hyundai's electric vehicles is becoming evident outside China, and there is an assessment that this presents a positive opportunity for Korean EVs to lead the trend.

This is interpreted as the result of a Chinese company acknowledging that it copied LG Energy Solution's core technology and accepting technological dependence. The outcome is expected to have a positive impact on Korea's EV battery industry and next-generation battery development. Although Chinese companies such as CATL and BYD are raising their market share, LG Energy Solution holds the core technology, which gives it bargaining leverage to collect royalties or block market entry through legal action whenever problems arise. However, Chinese government support could become a variable.

If Chinese companies have to pay royalties, their price competitiveness will fall, so Korean companies can use such legal disputes to gain the upper hand and maximize the competitiveness of K-battery technology.

Since BYD also uses LG Energy Solution's technology, this precedent will be an important basis for strengthening LG's negotiating position against BYD.

This is assessed as laying the groundwork for LG Energy Solution to use it as a strong point of pressure in patent disputes with other Chinese companies such as BYD. Therefore, making good use of this strength is important.

The aim is to secure military footholds in Asia and Africa and to lead a new international order that stands against the United States. In particular, energy security acts as a core element of this geopolitical strategy.

Beyond its geopolitical goals, the Belt and Road Initiative produces secondary effects. An example is using transactions in yuan to challenge dollar hegemony and advance yuan internationalization. It also serves to absorb excess domestic production capacity by exporting it abroad. Through these combined effects, the Chinese government is strengthening the domestic justification of the 'great rejuvenation of the Chinese nation.'

It is therefore directly tied to Xi's personal political standing, making it hard to abandon. The political significance of demonstrating China's revival through the Belt and Road is very strong.

The approach of 'I give you this, so you must listen to me' causes friction with local countries, and this is one of the main reasons resentment toward the Belt and Road is growing.

As a result, corruption problems such as embezzlement cases and misappropriation of funds by certain groups occurred frequently. Moreover, AIIB lending rates are much higher than ADB's, creating a structure in which borrowing countries easily fall into a 'debt trap.'

Belt and Road investment proceeds in a closed and opaque manner, with contract terms shared only with ruling elites and often structured unequally. Projects also tend to be pushed forward without considering environmental and cultural factors, and large numbers of Chinese workers flowing in can dominate local commerce. This raises concerns that it may infringe on the sovereignty of the host country, and the lack of transparency in the investment process has drawn criticism from the international community.

Beyond being a simple economic endeavor, this reflects a stronger reflection of geopolitical factors aimed at spreading China's power outward.