South Korea has strengthened its ties with both the U.S. and China through production networks in Association of Southeast Asian Nations (ASEAN) countries, despite ongoing tensions between the two superpowers. Notably, the proportion of semiconductors and electronics destined for the U.S. that pass through ASEAN has now surpassed that of China.
Experts caution that if the U.S. tightens rules of origin or intensifies investigations into export circumvention, it could have significant repercussions for domestic companies and demand for intermediate goods.
These findings were presented on September 13 in a Bank of Korea issue note titled, How is Global Economic Linkage Reshaped Amid Geopolitical Fragmentation? by researchers Park Min-jae, Jeong Seon-young, and Jeon Eun-chong from the central bank’s Research Department.
ASEAN Route for U.S.-Bound Semiconductors and Electronics Overtakes China
The research team analyzed how value added created in South Korea ultimately contributes to consumption and investment in various countries, using the Organisation for Economic Co-operation and Development’s (OECD) international input-output tables from 2016 to 2022.
The share of Korean value added linked to final demand in the U.S. that passes through five ASEAN countries rose from 4.9% in 2016 to 8.3% in 2022, while the share passing through China fell from 10.7% to 6.8%. The direct connection from Korea to the U.S. remained relatively stable, dipping slightly from 73.1% to 72.4%.
The shift was even more pronounced in the computer, electronics, and optical devices sectors. During the same period, the share passing through ASEAN more than doubled from 8.2% to 18.6%, while China’s share nearly halved, plummeting from 28.2% to 17.0%.
Countries like Vietnam, India, and Mexico have emerged as connector nations, bridging the U.S. market with China’s production network. Although U.S.-China trade decreased by 39.9% in 2025 compared to 2022, global trade continued through alternative production and procurement networks.
The research team’s analysis of the United Nations (UN) General Assembly voting patterns revealed that major connector countries are aligning more closely with the U.S. on political and security matters while maintaining or shifting towards China on economic and developmental issues.
Vietnam Emerges as Key Link Between U.S. and China, Highlighting Regulatory Risks in Export Buffer Network
Vietnam, in particular, has played a crucial role as a primary conduit. The share of value added from South Korea’s exports to Vietnam that leads to final demand in the U.S. jumped from 11.1% in 2016 to 18.5% in 2022, while the share leading to China increased from 7.3% to 13.9%.
In the semiconductor and electronics sectors, the share linked to the U.S. grew from 12.8% to 21.0%, while the share linked to China rose from 11.2% to 19.4%. This indicates a strengthened connection for supplying Korean intermediate goods produced and processed in Vietnam to both the U.S. and Chinese markets.
The researchers emphasized that ASEAN production bases are not merely cost-saving sites but also enhance the resilience of Korean supply chains by providing alternative production and trade routes in the event of geopolitical shocks.
However, they warned that if the U.S. tightens origin regulations or increases investigations into export circumvention, it could impact local production in ASEAN and demand for Korean components. Changes in local policies or logistics disruptions could also pose risks to Korean supply chains.
The researchers recommended diversifying supply chains to reduce dependence on specific production bases or routes.
