Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Samsung, SK, Hyundai's investment plans fuel US trade pressure concerns
Samsung Electronics' foundry plant in Hwaseong, Gyeonggi Province / Courtesy of Samsung Electronics
By Lee Min-hyung
Trump unlikely to view chipmakers' huge domestic investment favorably: experts
Samsung Electronics and SK hynix’s unprecedented 800 trillion won ($522.8 billion) investment plan for Korea's southwestern semiconductor belt is emerging as a critical test of their relationship with the United States, as experts and industry officials warn that Washington could intensify pressure on the Korean firms to expand manufacturing on U.S. soil.
They said the Donald Trump administration, which has consistently used tariffs and trade policy to encourage foreign companies to invest in the U.S., is unlikely to view such massive domestic investment plans by the Korean chipmakers favorably.
Earlier this year, Trump warned that memory chipmakers that failed to build manufacturing facilities in the U.S. could face tariffs of up to 100 percent, a remark widely interpreted as targeting Samsung Electronics and SK hynix.
Although the proposed semiconductor tariffs have since been put on hold and have yet to be implemented, the measure remains a potential source of leverage in future trade negotiations between Seoul and Washington.
Samsung Electronics is currently investing $37 billion to build its semiconductor manufacturing complex in Taylor, Texas. The semiconductor fabrication facility is scheduled to begin operations later this year and will manufacture advanced chips based on the firm's 2-nanometer process.
SK hynix's chip manufacturing facility in Icheon, Gyeonggin Province / Yonhap
SK hynix is also expanding its U.S. footprint by investing $3.87 billion in Indiana to build an advanced packaging facility for artificial intelligence (AI) memory chips.
Both companies generate a significant portion of their revenue from U.S. tech titans, such as Nvidia, Google and OpenAI.
Despite their growing revenues in the U.S., both chipmakers are preparing to invest far larger sums at home.
Last week, Samsung Electronics and SK hynix unveiled plans to invest a combined 800 trillion won over the coming years to construct four new semiconductor fabrication plants in Korea's southwestern region, including Gwangju and South Jeolla Province.
Under the plan, Samsung Electronics and SK hynix would each build two semiconductor fabs in what would become one of the largest industrial investment initiatives in the country's history.
Other key manufacturing players here are also expanding their domestic investment.
Hyundai Motor Group recently announced plans to invest 42 trillion won over the next decade in the southeastern region to foster advanced industries, including AI-defined vehicles and next-generation energy infrastructure.
Hyundai Motor and Kia, both of which derive roughly half of their exports from the U.S., have already experienced the impact of U.S. trade policy. The two Korean carmakers reported double-digit declines in operating profit last year following the imposition of 15 percent U.S. tariffs.
"The Trump administration, which places a strong emphasis on protectionism and domestic manufacturing, is unlikely to view the large-scale domestic investment by the Korean semiconductor and manufacturing firms positively," said Kim Dae-jong, a business administration professor at Sejong University.
Hyundai Motor Group Vice Chair Chang Jae-hoon speaks on the carmaker's investment initiative in Jinju, South Gyeongsang Province, Friday. Joint Press Corp
Kim added that growing trade friction between Seoul and Washington surrounding the recent Coupang controversy could further complicate the situation.
Seoul and Washington is engaged in a tit-for-tat over Korea’s sanctions against Coupang. A recent report, released by the U.S. House Judiciary Committee, alleged that the Korean government had discriminated against U.S.-based firms, including Coupang.
Korea’s ruling Democratic Party of Korea sharply criticized the report, saying that it “seriously distorts the position of the Korean government by relying on Coupang’s unilateral claims and unverified materials.”
Korea's Personal Information Protection Commission recently imposed a record 624.6 billion won fine on Coupang over a data breach affecting approximately 33.7 million users.
"Korea relies heavily on the U.S. for both security and economic cooperation, and it should avoid creating misunderstandings," Kim said.
"The fine imposed on Coupang was substantial enough to provoke a negative response from the world’s largest economy. Seoul should maintain a prudent approach in order to minimize any future trade friction with Washington."
An industry official said Korean conglomerates may end up facing increasing pressure to expand their U.S. investment if both countries escalate trade tensions.
"Korea should not provoke the U.S., so Korean firms do not fall victim to any additional tariff or trade retaliation,” an official at a Korean conglomerate said.