The United States has moved to consolidate allies and partner nations including South Korea into a US-centered supply chain as it intensifies competition with China for artificial intelligence supremacy. The strategy effectively aims to completely isolate China from the global AI supply chain.
President Donald Trump, who has paused the US-China trade war until the midterm elections in November next year, is working to build a supply chain free from Chinese dependence or threats before then. China is signaling it may reject Nvidia's high-performance AI graphics processing unit H200 even after Trump authorized its export on January 8. Within the United States, both Republicans and Democrats are strongly opposing the decision to allow Nvidia chip exports to China.
For South Korea, which is already actively supplying high-bandwidth memory (HBM) and other products to US companies, pressure to declare a strategic alliance with the United States could prove burdensome. There is no additional practical benefit, while the move could create friction with China, which has remained diplomatically neutral toward Korea. Moreover, President Lee Jae-myung is reportedly exploring plans to make a reciprocal visit to China in January following Chinese President Xi Jinping's visit to Korea. Amid the US-China power struggle, companies including not only America's Nvidia but also Korea's Samsung Electronics (005930.KS) and SK hynix (000660.KS) could become entangled.
US Launches 'Pax Silica' to Isolate China from AI Supply Chain
The US State Department held the first "Pax Silica Summit" on January 12 in Washington DC with eight countries—South Korea, Japan, Singapore, the Netherlands, the United Kingdom, Israel, the United Arab Emirates, and Australia—and drafted a declaration effectively excluding China from the AI supply chain. Seven countries participated in the Pax Silica declaration, excluding the UAE and the Netherlands. Their absence is interpreted as reflecting geopolitical considerations in the Middle East and European Union respectively.
"Pax Silica" is a coalition assembled by the United States to counter China, with which it has intense technological competition. The term combines the Latin word "Pax" meaning peace with "Silica," a semiconductor material, signifying that the United States should lead the global AI order.
In the declaration released by the US State Department and Korea's Ministry of Foreign Affairs, the participating nations stated, "We recognize that reliable supply chains are essential to our collective economic security" and "encourage efforts to strengthen cooperation in strategic areas of the global technology supply chain." The areas of enhanced cooperation include software applications and platforms, data infrastructure, semiconductors, mineral refining and processing, and energy.
While not naming any specific country, the declaration effectively targeted China by emphasizing the importance of fair market order. The nations stated, "Economic security requires reducing coercive dependencies and building new linkages with reliable partners and suppliers that adhere to fair market practices" and stressed that "it is important to respond to non-market practices that undermine innovation and fair competition." They added, "Cooperation among countries in implementing policies is important for protecting private investment from market distortions such as overproduction and unfair dumping practices, and for safeguarding sensitive technologies and critical infrastructure from improper access, influence, and control."
The US pursuit of Pax Silica is interpreted as a strategy to solidify technological superiority by reorganizing the supply chain of semiconductors and rare earth elements—core resources for the AI industry—around the United States amid intensifying technological competition with China. As China weaponizes rare earths to pressure the United States, the plan is to build a core supply chain structure to counter this through alliance solidarity. Japan, which has recently been in conflict with China over Taiwan issues, signed a joint document confirming cooperation with the United States a day earlier on January 11 at a US Institute of Peace event in Washington DC. Political media outlet Politico reported on January 12 that "Pax Silica is a coalition to outpace China's vast technology industry investment and address America's lack of access to critical minerals," noting that "the Trump administration recognizes China's rare earth monopoly as a major threat and is concerned that China could gain an edge in the 21st-century economy through AI and quantum computing investments."
Korea Expected to Handle HBM and Batteries, Wary of China Relations
Participating countries will soon form working groups by sector to coordinate AI supply chain cooperation and division of tasks. The United States is expected to oversee industries including AI semiconductor architecture, accelerators, platforms, and equipment. It is also expected to lead technology standard-setting, dollar-based financial support, and sanctions against competitors.
Japan is expected to supply semiconductor materials, components, and equipment and cooperate on advanced fundamental technologies. Singapore is expected to serve as an intermediary for logistics, technology, and capital. The UK will focus on AI norms and diplomacy. Israel will handle chip design and military and security technology. Australia is expected to provide raw materials including rare earths, lithium, and uranium.
Korea, centered on Samsung Electronics and SK hynix, is highly likely to be responsible for supplying memory semiconductors including HBM and some foundry services. Secondary batteries and energy processing are also areas where Korea has strengths. Vice Foreign Minister Kim Jin-a, who attended as Korea's chief representative, emphasized, "We will contribute to supply chain stability based on the capabilities of Korean companies that excel in batteries, semiconductors, and energy" and stated that "we should cooperate in a direction that helps create a favorable environment for companies from participating countries at the Pax Silica Summit."
On January 10, Vice Minister Kim also separately met with Jacob Helberg, US Under Secretary of State for Economic Growth, Energy, and the Environment, in Washington DC for the 10th Korea-US Senior Economic Dialogue (SED). The SED is a vice ministerial-level regular consultation channel where Korean and US diplomatic authorities discuss comprehensive economic cooperation. According to the State Department, the two vice ministers emphasized strengthening joint economic security measures and the importance of securing reliable supply chains.
The Trump administration, which had previously neglected allies and partner nations, suddenly assuming this leadership role is interpreted as an attempt to prevent neighboring countries from engaging with China. The UAE, for example, saw Trump promise to supply advanced semiconductors in exchange for large-scale AI-related investments during his Middle East tour in May, only to hesitate for a long time afterward. Commerce Secretary Howard Lutnick and others raised security concerns because the UAE maintains close ties with China. Former President Joe Biden also set limits on AI semiconductor export volumes to the UAE for the same reason. Nvidia chip exports that Trump promised to the UAE were finally approved around October, five months later, after persistent lobbying by CEO Jensen Huang. The UAE did not sign the Pax Silica declaration.
According to Chinese state media Global Times, Foreign Ministry spokesperson Guo Jiakun responded to questions about Pax Silica on January 12 by warning that "all parties should adhere to the principles of market economy and fair competition." This implied that Pax Silica itself undermines fair market economy.
China Refuses Nvidia H200, US Congress Opposes Export Approval
Trump's decision to allow Nvidia H200 exports to China, intended to make China dependent on American semiconductors, is facing criticism from all sides. The H200 has far better performance than the H20, which the US had previously allowed for export to China, but lower specifications than the cutting-edge Blackwell chip. David Sacks, chairman of the White House Science and Technology Advisory Committee, who is called the "AI Czar" for overseeing the Trump administration's AI policy, told Bloomberg in an interview on January 12 that "China is rejecting our chips" and "they prefer semiconductors developed domestically."
The US Congress has also opposed this decision across party lines and both chambers. According to the UK's Financial Times on January 12, Representative John Moolenaar (R-Michigan), chairman of the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, recently sent a letter to Commerce Secretary Howard Lutnick...
