The US government proposed setting up a semiconductor industry alliance with its Asian allies, including South Korea, Japan and Taiwan, to keep mainland China’s fledgling semiconductor industry at bay, a Korean news portal reported this week.

The proposal was not “fully acceptable” to Seoul because South Korean chip giants Samsung Electronics and SK Hynix have invested billions of dollars in key manufacturing facilities in China, and feared retaliation from Beijing if such an alliance went ahead, BusinessKorea reported, citing an anonymous industry source.

Washington and Seoul have not commented on the report, which did not provide details on when and where the proposal was made.

Samsung did not immediately respond to an emailed request for comment. SK Hynix declined to comment for this article.

Since the outbreak of the Covid-19 pandemic, which triggered a global chip shortage, Washington has been looking for ways to reduce its supply chain reliance on China.

In September 2020, under the Trump administration, the US, Taiwan, Japan and European Union officials flirted with the idea of bringing together “like-minded” democracies to shift supply chains away from mainland China.