Advertisement

Blog

Time to Think About Korean Contingencies

By now we're all familiar with the noise coming out of Pyongyang. The young dictator in the North Korean capital has canceled the truce with South Korea and has declared war on the United States. (To catch you up, here's a handy infographic of events that have transpired recently.)

It might be mostly bluster. But it's being taken seriously enough that the US has stepped up its military activity in the region and China has begun massing troops along its border with North Korea.

Let's assume it is mostly bluster coming from a young man who feels the need to consolidate power in his nightmarish regime. But what if it's all not bluster? What if Kim Jong-Un feels the need to strike out?

Massive implications
If he does, it's going to be South Korea and its economy that's going to feel the brunt of that attack. And it's going to have implications for economies around the world and for electronics supply chains.

South Korea is a significant player in electronics supply chains. Its two largest producers of DRAMs, Samsung Electronics and SK Hynix Semiconductor, alone had nearly two thirds of the global market share at the end of last year according to IHS iSuppli.

Another problem is that much of South Korea's tech industry is close to the border. Downtown Seoul is only 25 miles from the border — not very hard to hit with North Korean rockets.

Speaking of Samsung, its global headquarters are just south of Seoul. Samsung is the world's largest manufacturer of liquid-crystal display panels, memory chips, and mobile phones, and is second only to Intel Corp. in overall semiconductor production.

A Missile's Throw From the Border

Samsung, an enormous player in the global electronics market, is  headquartered just 25 miles from the border of saber-rattling North Korea.

Samsung, an enormous player in the global electronics market, is
headquartered just 25 miles from the border of saber-rattling North Korea.

Just about every major global technology company relies on a supply-chain connection to Samsung to some degree. Apple, Hewlett-Packard, Dell, Verizon, and AT&T Inc. bought around $40 billion worth of products from Samsung last year, from dislays to DRAMs to chips and handsets. Samsung also makes chips for Qualcomm and Texas Instruments, which are used in many other smartphones and tablets.

Not all of Samsung's production takes place in Korea. But the company's 1,000-acre liquid-crystal display production facility is also within range of North Korean air and sea attacks.

Drawn-out engagement
Military experts believe that US and South Korean forces won't be able to defeat North Korea quickly. Bruce Bennett, a Korea expert at the Rand Corporation, quoted in US News, said, “It could easily take months.” Bennett estimates that the North could damage or destroy 10 percent to 15 percent of South Korea's GDP.

No doubt this will cause some disruption to the pace of manufacturing in South Korea and to electronics supply chains but that doesn't mean that the technology industry will come to a screeching halt. US firms have the experience of finding alternative suppliers, much as they did in the wake of the earthquake and tsunami that struck Japan in 2011.

The auto industry, for one, is on record as having started making contingency plans. “You've got to start to think about where you have the continuity of supply and safety of your assets and your employees,” said General Motors CEO Dan Akerson in the Detroit News.

Let's hope managers of the electronics supply chain are doing the same.

Related posts:

12 comments on “Time to Think About Korean Contingencies

  1. _hm
    April 9, 2013

    I would suggest US and ally should make pre-emptive attack on North Korea and resolve this long out standing issue quickly at very low cost. This will also help people of North Korea.

    With this electronics market will be least disturbed.

     

     

  2. Anand
    April 10, 2013

    I would suggest US and ally should make pre-emptive attack on North Korea and resolve this long out standing issue quickly at very low cost.

    @_hm, I dont think its a good idea. Fact is North Korea has nuclear capability and if US and allies start the war then North Korea will definitely try to hurt South Korea. Historically North Korea shows agreesion like this and I believe this time too they are just posturing and they are not serious about the war.

  3. rohscompliant
    April 10, 2013

    The new leader is just doing what he saw his Daddy Do. It is a rite of Spring for them. They threaten and we give them aide. I say let them rot and maybe the people will revolt & topple this regime.

  4. garyk
    April 10, 2013

    QUESTION:

    What Countries support North Korea?

    What benift to those Countries would it for North Korea to attack South Korea?

    Now think about contingencies plans.

  5. harpat949
    April 10, 2013

    It is not likely that North Korea will use nuclear weapons. Why would they want to be completely annihilated?

  6. Geoff Thomas
    April 10, 2013

    Possibly the Chinese could be encouraged to come into North Korea and take over, – they certainly would not let anyone else do that, but the people of North Korea would probably be better off, stability would be achieved, and China may agree to some sort of relative independence in the future.

    It would possibly require a letter of request from the United Nations?

    G

  7. SP
    April 11, 2013

    Yes absoultely contingency plans are needed for everyone who depend heavily on these Samsung products. But then it would be most of the electronics industry. War never helps anybody. It only causes distruction.

  8. Houngbo_Hospice
    April 11, 2013

    @GeoffThomas

    “Possibly the Chinese could be encouraged to come into North Korea and take over”

    That will not be a long-term solution to the crisis. And I don't think it will be wise for the UN to give that “permission” to China. I think there is no need to rush into actions that will affect the stability of the whole region.

  9. Houngbo_Hospice
    April 11, 2013

    @_hm,

    “I would suggest US and ally should make pre-emptive attack on North Korea and resolve this long out standing issue quickly at very low cost.”

    Easier said than done. North Korea is not Irack or Afganistan. The country's nuclear weapon destructive capability should not be taken lightly. I think the right thing to do is to favour diplomatic solutions as much as possible. 

  10. Geoff Thomas
    April 11, 2013

    @Hospice-Houngbo, – Why do you say it would not be a long term solution to the crisis? – in the short term, North Korea would lose it's capacity to do stupid things, ie. it's Govt. would no longer have control over it's military, – in the long term, North Korea (NK) would return to being a puppet of China but China would integrate it into their economic structure, – relationships with South Korea would be easier, – no longer would Seoul have to deal with a mad dog, local employment opportunities over the border would go as with Hong Kong, – the Chinese are not stupid.

    In the longer term, the Chinese would probably not let NK go to be free and mad again, and internal protests would be dealt with strongly, – as as now from the NK Govt, – NK would be well behaved and possibly contribute something else other than hate to the rest of the world.

    This would cetainly be a long-term solution to the crisis, can you think of any reasons why not? 

  11. Anand
    April 13, 2013

    What Countries support North Korea?

    @garyk, I think China is the only nation which is having very good relation with North Korea. I am not sure if China is encouraging N.Korea to target S.Korea because this will eventually create lot of unrest in Asia region.

  12. Anand
    April 13, 2013

    The country's nuclear weapon destructive capability should not be taken lightly.

    @HH, I totally agree with you. I think nuclear war is not a soluiton here, instead all countries should urge North Korea to soften its stand. Counties like China who are having good relation with N.Korea should persuade N.Korea to start negotiations with S.Korea.

Leave a Reply