Semiconductors, which are essential for high-tech products, are China’s largest import and Korea’s largest export. Since the U.S.-China trade war, the U.S. has aggressively controlled exports of semiconductors to China to hinder China’s development of high-tech industries. These U.S.
<br>export sanctions were expected to negatively affect Korea’s semiconductor exports to China.
<br>However, Korea’s semiconductor exports to China have continued to increase even after the sanctions. To explain this fact, this study empirically verified the effects of the Korea-China FTA on semiconductor trade between the two countries. Since the 2010s, the complementarity of semiconductor trade has been maintained in the aftermath of the trade war. Korea’s competitive advantage over China in the memory chips strengthened this trend. The gravity model, including variables such as distance, population, and gross domestic product (GDP) and regression analysis showed the correlation between FTA and semiconductor trade. In other words, the FTA contributed to converting semiconductor trade, which decreased in 2019 when U.S. export control was strengthened, back to an increase in 2020. The limitations of the study are that it has only a six-year analysis period and did not consider geopolitical and technical variables that could have affected semiconductor trade.
