South Korea and U.S. negotiate chip investments amid tariff concerns

South Korea and the United States are engaged in bilateral negotiations regarding semiconductor investments in the U.S. The talks follow signals from U.S. Commerce Secretary Howard Lutnick regarding a “targeted, thoughtful tariff policy” on semiconductor imports. Lutnick stated, “If you don’t build here, expect to pay to enter the greatest market in the world,” emphasizing Washington's goal to drive domestic production.

The discussions involve a previous agreement where South Korea committed $350 billion toward U.S. manufacturing investment. Under that deal, South Korean chipmakers were promised tariff rates “no less favorable” than those offered to competitors with similar trade volumes. However, tension exists because the clause ensures parity rather than a total exemption, meaning Korean firms could still face tariffs if they are applied broadly.

Major South Korean memory chipmakers, including Samsung Electronics and SK Hynix, face these pressures as global demand for semiconductors rises due to the expansion of AI infrastructure by U.S. tech firms. While South Korean firms are increasing domestic capacity, such as SK Hynix’s $720 billion investment in Yongin, the gap in U.S.-based manufacturing footprint compared to competitors like TSMC remains a point of strategic concern.