US tariff threat fuels uncertainty in Korean chip industry

U.S. President Donald Trump speaks to the media in the Press Briefing Room at the White House in Washington, June 27. Reuters-Yonhap

Korea’s semiconductor sector is facing mounting uncertainty following U.S. President Donald Trump's threat to impose tariffs on semiconductors and pharmaceuticals.

“We’re going to be announcing pharmaceuticals, chips and various couple of other things — you know, big ones,” Trump told reporters Tuesday (local time).

Although he had yet to specify tariff rates or timelines, Trump’s remarks — coupled with recent policy developments — heightened concern across Korea’s chip industry.

On the same day, U.S. Commerce Secretary Howard Lutnick confirmed that Washington will complete its ongoing investigations into semiconductor and pharmaceutical imports by the end of this month. Next, Trump is expected to determine whether to impose additional trade restrictions.

The Trump administration’s ongoing investigations under Section 232 of the Trade Expansion Act have made it clear that semiconductors are among the items being considered for tariffs on national security grounds. The section allows the president to impose tariffs or restrict the importation of goods that threaten national security.

While Trump’s Monday letter to President Lee Jae Myung did not specifically mention semiconductors, he vowed to impose a 25 percent tariff on all Korean imports starting Aug. 1. The letter also urged Korean companies to boost production in the U.S., a move widely seen as targeting Korea’s key export industries, including semiconductors.

“As you are aware, there will be no Tariff if Korea, or companies within your Country, decide to build or manufacture product within the United States and, in fact, we will do everything possible to get approvals quickly, professionally, and routinely,” Trump said in the letter.

Containers are stacked at a port in Pyeongtaek, Gyeonggi Province, July 1. Yonhap

If the proposed 25 percent tariff is implemented, annual sales for Korean semiconductor companies are expected to decline by an estimated 4.3 percent. For Samsung Electronics’ Device Solutions division, which posted 111.1 trillion won ($80.9 billion) in sales last year, this would translate to a potential revenue loss of approximately 4.78 trillion won. SK hynix, which recorded 66.19 trillion won in sales during the same period, could see a drop of about 2.85 trillion won.

Although the immediate direct impact on the industry will be limited, concerns are growing over potential indirect damage, such as shifts in global supply chains, market realignment and mounting pressure to expand production in the U.S.

Lee Jong-hwan, a professor of system semiconductor engineering at Sangmyung University, emphasized that both the government and companies should respond with flexibility and seek ways to turn the pressure into an opportunity.

“If the U.S. imposes high tariffs on memory, especially high-bandwidth memory (HBM), it won’t benefit the U.S. much … because U.S. companies using these products will only face increased costs, giving them no real benefit. So it would be hard to maintain such tariffs for long,” the professor noted.

“What the U.S. needs right now in semiconductors is production capacity. HBM and foundry services only make sense when there are customer orders, so Korean companies and the government should focus on securing contracts from major U.S. tech firms.”

He explained that the current shortage of advanced semiconductor production lines in the U.S. could create a win-win situation for both countries.

“Once orders from Big Tech companies are secured, investment in the U.S. will naturally follow. Samsung or SK can then generate profits through either HBM or foundry operations,” he said.

“If production lines are expanded or new investments are made in the U.S., it will also benefit U.S. national interests. By continuing negotiations and investing, companies can earn profits and reinvest those profits back into Korea. This way, they can avoid tariffs and secure practical gains."

The industry remains cautious, noting that there is still insufficient information to formulate specific countermeasures or responses.

“Tariffs are ultimately a matter between governments. From a corporate standpoint, nothing has been officially communicated yet,” an industry insider said. “We’re closely monitoring the situation, but it’s hard to predict how, when or to whom the tariffs will apply. For now, we have no choice but to wait and see.”