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A Tug of War: South Korea's Semiconductor Supply Chain Faces a Crisis Amid Israel-Palestine Conflict

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Waqas Arain
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A Tug of War: South Korea's Semiconductor Supply Chain Faces a Crisis Amid Israel-Palestine Conflict

As the sun sets over the sprawling semiconductor factories of South Korea, the heart of the global tech industry, an invisible thread stretches thousands of miles away, tethering the fate of this powerhouse to a small country in the Middle East: Israel.

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Unforeseen Dependencies

The ongoing conflict between Israel and Palestine is more than a distant geopolitical event for South Korea. It's a potential chokepoint in its vital supply chain. A report by the Korea Trade Association warns that if Intel's CPU plant in Israel shuts down due to the conflict, it could knock the wind out of the semiconductor industry's recovery. Israel might account for a tiny sliver of South Korea's trade, barely 0.3-0.4%, but when it comes to certain key items, that sliver turns into a lifeline. Eight items, to be precise, show an over 90% dependence on Israeli imports.

The Bromine Bottleneck

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At the top of this list is bromine. This chemical element, which fuels various industries, flows into South Korea almost entirely from Israel. In fact, a staggering 99.6% of all bromine imports come from this tiny nation. It's a classic case of putting all your eggs in one basket. And now, with the basket teetering on the brink, South Korea needs to find other baskets, and fast.

Beyond Israel: Diversification as the Key

According to the report, South Korea needs to prepare for a possible disruption in supply. It advises the country to be ready to switch to suppliers from the US, Jordan, China, and Japan. This isn't just about bromine or semiconductors. It's a wake-up call for South Korea, and indeed, for all nations and industries. The escalating conflict and its potential impact on global supply chains highlight the critical need for diversification and resilience in sourcing strategies.

A Lesson Learned

The potential crisis South Korea faces is a sobering reminder of how interconnected our world has become. A spark in one corner can kindle a fire in another. The solution isn't to retreat into isolation but to weave a web of relationships so diverse and resilient that no single conflict can sever it. As South Korea grapples with this challenge, the world watches, learns, and hopefully, prepares.

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