Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Korea gauges impact of Trump’s 25% chip tariff order
President Donald Trump speaks during a bill signing ceremony in the Oval Office at the White House in Washington, Wednesday (local time). UPI-Yonhap
By Nam Hyun-woo
Direct impact could be limited, but uncertainty amplifies further
U.S. President Donald Trump on Wednesday (local time) enacted a new 25 percent tariff on certain advanced chips, including Nvidia’s H200 artificial intelligence (AI) accelerators, introducing greater uncertainties across the entire semiconductor supply chain.
Semiconductor companies in Korea are scrambling to assess their exposure across global supply chains in the wake of the move. Many memory chips bound for Nvidia are first shipped to third countries for integration into finished products before being exported to the United States, limiting immediate impact on Korean firms. However, higher costs are often passed down the supply chain, and Trump has also warned of broader tariffs, forcing companies to navigate fresh uncertainties.
According to Trump’s proclamation and a White House fact sheet, the president imposed a 25 percent tariff on advanced computing chips such as the Nvidia’s H200 and AMD MI325X.
The fact sheet noted, “This tariff will not apply to chips that are imported to support the buildout of the U.S. technology supply chain and the strengthening of domestic manufacturing capacity for derivatives of semiconductors.” This means that the H200 and other chips, which were manufactured in Taiwan, shipped to the United States and then re-exported to China, will be subject to the tariff.
The White House fact sheet also warned that Trump in the near future “may impose broader tariffs on imports of semiconductors and their derivative products.”
Nvidia's HGX H200 / Courtesy of Nvidia
The proclamation was widely interpreted to be aimed at allowing H200’s sales to China on condition of a 25 percent tariff, but is feared to have impacts on Korean memory makers as well, because the cited AI accelerators use high-bandwidth memory 3E (HBM3E) manufactured by SK hynix and Samsung Electronics.
Industry officials said memory suppliers have little visibility into or control over the final export destination of the memory chips they ship, suggesting the direct impact would be limited.
“In the first place, only a very small share of memory chips produced by Korean companies is exported directly to the U.S,” an industry official said.
“In most cases, the chips go through original equipment manufacturers in countries such as Taiwan before entering the U.S. After that, it is not really something memory suppliers can control but an issue that needs to be handled by chipset makers (like Nvidia).”
The U.S. assurance of most favored nation status on Korean chip exports also suggests the direct impact could be limited. During a trade agreement reached between Trump and President Lee Jae Myung in November last year, Seoul was assured it would not be treated less favorably than other countries on Washington’s chip tariffs.
The problem, however, is that higher tariffs on companies such as Nvidia are likely to ripple through the supply chain, with makers of finished products seeking to pass the increased burden on to component suppliers.
For now, U.S.-based Micron could be affected by the tariff policy because its manufacturing bases are spread around the world. However, since the tariffs are designed to support the U.S. semiconductor industry, there are concerns that the market could be reshaped in a way that ultimately favors Micron over the longer term.
“The situation is highly unpredictable,” a second industry official said. “You may expect the cost to be passed through the supply chain, but it may not happen given that memory suppliers are currently in a position to dictate terms in price negotiations.
“Adding more uncertainty is that Trump has threatened additional tariffs, and there have been multiple precedents of the Trump administration’s tariff policies flip-flopping, making it difficult to gauge their impact on the domestic semiconductor industry immediately.”
Trade Minister Yeo Han-koo answers reporters' questions at Union Station in Washington, D.C., Wednesday (local time). Yonhap
Against this backdrop, Trade Minister Yeo Han-koo, who had been set to return home after a weeklong trip to the U.S., decided to extend his stay to examine the potential domestic impact caused by the chip proclamation.
The Ministry of Trade, Industry and Resources also held an emergency meeting to assess the proclamation’s impact. The ministry said it will make “all-out” efforts to minimize the impact of the latest U.S. move on Korea while maintaining communication with affected industries.