Samsung, Hyundai prepare massive US investments ahead of Moon-Biden summit

Samsung Electronics is expected to build its second U.S. plant, estimated to be worth 20 trillion won ($17.9 billion), in Austin Texas. Korea Times file

By Yi Whan-woo

Samsung and Hyundai Motor Group are set to make massive investments in the United States ahead of a summit between President Moon Jae-in and U.S. President Joe Biden in late May, according to industry sources, Monday.

The sources said the spending by Korea's two largest conglomerates complements Biden's initiatives to rebuild U.S. manufacturing by focusing on strategic and green technologies for a sustainable future ― part of efforts to "outcompete" China.

Samsung Electronics is in the final assessment stage for the construction of its second U.S. semiconductor plant in Austin, Texas, estimated to cost 20 trillion won ($17.9 billion). The first plant, also in Austin, produces processing semiconductors for top clients such as Apple, AMD and Qualcomm.

Another Samsung affiliate, Samsung C&T, is considering investing $673 million in the U.S. to build solar power plants with a combined production capacity of about 700 megawatts in Milam County, Texas.

Hyundai Motor Group plans to set up a new line at its Alabama factory to manufacture the IONIQ 5, the latest electric vehicle (EV) produced by affiliate Hyundai Motor.

The groups and their relevant affiliates declined to confirm the investment plans or give related details.

However, industry sources say consultations are underway between the Korean government and the respective business groups, adding that related announcements may be made shortly before or after the upcoming summit.

U.S. President Joe Biden speaks at the virtual Leaders Summit on Climate from the White House, Friday. AP-Yonhap

"It will be very dramatic for the Korea-U.S. relations if the announcement is made then," a source said, noting Biden addressed the global shortage of semiconductors during a virtual meeting with international corporate leaders April 12 (KST).

Samsung's semiconductor plant will manufacture processing chips, a sector that the U.S. is seeking global dominance in, on a foundry (contract) basis.

The construction of Samsung C&T's solar power stations will reportedly begin in June 2021 with operation expected to begin in December 2023.

The plants will provide electricity for the surrounding area, playing a part in Biden's goal of eliminating carbon emissions from the electricity generating sector by 2025.

Production of the IONIQ 5 in the U.S. will offer more choice for customers there as Biden pushes for an increase in the use of EVs in accordance with America's return to the Paris Climate Accords.

The sources say that contributing to the Biden administration's goals through the massive investments could help the Moon administration's "vaccine swap" plan.

Korea is lagging behind in its timetable for COVID-19 vaccinations to achieve herd immunity by November due to a delay in the shipments of vaccines.

The government has asked Washington to supply it with vaccines from its stockpile, which it would pay back later.

But the Biden administration has said that the inoculation of Americans was a priority, raising doubts over the feasibility of the plan.

"It's possible the Korean government will use the investment of Samsung and Hyundai in the U.S. diplomatically to acquire vaccines," another source said.

In the case of Samsung, some expect that the Moon administration may seriously consider "paroling" imprisoned Samsung Electronics Vice Chairman Lee Jae-yong to have him accompany Moon for the summit, which many believe will help the government get what it wants from the U.S., noticeably the "vaccine swap."

In a survey released by the Federation of Korean Industries (FKI), Monday, 31.2 percent of the 1,004 correspondents said the "vaccine swap" should be the most important target for the government to achieve from the planned summit.

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