Why the Tech World Needs to be Concerned about North Korea’s Nukes

Like many in the tech industry, I have traveled dozens of times to Japan, Hong Kong, China, Taipei, Singapore and S.Korea as part of my job. This region of the world has been important to our tech market as it has become our key manufacturing arm and has made it possible for most US companies to deliver a product at cheaper prices and thus allowed them to grow over the years.

This region has also given us major tech competitors such as Sony, Panasonic, Toshiba, Samsung, LG etc and helped keep prices down on all products as part of the competitive circle of life.

If you travel to these parts of the world you are perhaps more aware of the political climate in many of these countries and know that China believes Taipei belongs to them. And now that Hong Kong is a region of China, it is subject more and more to China’s political rules and regulations.
But at the moment the major tinder box in this region is S. Korea and N.Korea and it is this area of the world that our tech leaders need to be watching closer than ever.

S. Korea is vitally important to the tech world for many reasons. Samsung not only makes smartphones but also appliances, computers, hard drives, TV’s and perhaps more importantly, semiconductors and flash memory and provides chips to Apple and other big tech players as well. Then you have Hyundai, LG and POSCO, one of the largest steel manufacturers in the world. All told, S. Korea has over a hundred major companies providing products and services all over the world.

Some years back, on a trip to Asia and especially S. Korea, I asked a top tech official what concerns him the most. He told me that one of his greatest concerns would be the collapse of N. Korea and the fact that millions of N. Koreans would rush over the border and paralyze S. Korea’s region and economy. He felt that this rush over the boarder would destabilize S. Korea for a time and it could take years to bring it back to a level of normalcy where the tech companies who are running smooth now could get back to what they do best when not interrupted.

High on the list of this disruption is the fact that so many people in N. Korea have relatives in S. Korea and they would seek refuge with them, many who work in the companies and factories that turn out the products we use. This type of personal, political and economical disruption could have a major impact on S. Korea’s companies and their ability to continue to deliver in a timely fashion for a period of time that it would need for S. Korean officials to stabilize the region.

But this would be much bigger than causing shipping delays and business disruptions. The human toll could be devastating for the country and we could have a major humanitarian crisis if S. Korea has trouble dealing with this onslaught of N. Koreans flooding their country and needing assistance to stay alive.

Because of this perspective, I have been watching the recent moves by North Korea to advance their long range nuclear reach and what I fear is this is more than saber rattling given the instability of N. Korea’s leadership. Their leader Kim Jong UN may want to do anything he can to remain in power.

This week President Trump meets with China’s Premier XI Jinping and is reportedly going to tell him that if China won’t help with solving the N. Korean problem with us, the US is willing to go about it on its own to deal with this nuclear threat.

Now I don’t profess in the slightest that I know what that means to “go it alone” but as Secretary of State Rex Tillerson has said “all options are on the table” when it comes to dealing with North Korea.
Given the fact that our current administration is unpredictable and has little experience in dealing with a crisis like the one we have in N. Korea, anything is possible including some type of surgical strike to try and take out their Nuclear sites. And an outside of attack like this could cause major panic and start the process of a boarder rush that would be hard for S. Korea to control.

Some US companies have this same concern and are already working on contingency plans should their own business be disrupted by what could happen in S. Korea. For small companies seeking optional sources for components, this is probably a manageable problem given how other major countries in Asia have some many of the things they rely on from S. Korea now. But for big companies like Apple, who buy a lot of chips, screens etc from Samsung and other big companies who source millions of chips and products specifically from S. Korean companies, this could be a big problem for them. How they deal with this problem, should it come up, will be a big test of their sourcing teams and their ability to minimize the impact on their ability to deliver products to their customers and will determine how well they can manage a crisis of this magnitude.

My hope is that China does agree to work to keep N. Korea from advancing their nuclear program and help to stabilize this ticking time bomb in the Hermit Kingdom. Trumps meeting with China’s Premier will be the most important one he has since coming to office. But should China not agree to help, or in the end not be able to keep N. Korea from becoming more aggressive with their nuclear program, Trump and team seems to be determined to find a way of their own to solve this problem and as Tillerson has said “all options are on the table” so anything could happen.

A good friend of mine, who travels to this area of the world 10-12 times a year and really understands the political side of these countries, says that “the only way to normalize North Korea, which may sound counterintuitive, is to help them find a way to feel more secure. North Korea will start focusing on its prosperity and potentially surrender its nuclear deterrent only when it feels safe and a part of the northeast Asian economy. More sanctions, or more disastrously any military action, will not end well.”

I believe this is a wise observation and I would hope that our current administration has someone inside that understands this option. Although those in the political arena are watching this N. Korean problem closely, our tech companies need to as well since whatever happens over there could eventually impact their companies too.