NEW YORK – A revived threat from US President Donald Trump to impose a 100% tariff on imported semiconductors has reignited concerns in South Korea’s chip industry, even as Seoul officials seek to reassure investors that Korean companies are unlikely to face the full brunt of the measure.
Trump said on Wednesday that “all semiconductors coming into the US” would be hit with 100% tariffs unless companies build production facilities on American soil.
While the remarks lack details and policy implementation remains unclear, they have nonetheless jolted industry players already wary of growing trade fragmentation, analysts said.
(Graphics by Daeun Lee) South Korean officials and corporate executives downplayed the risk of a “tariff bomb,” citing a recent trade agreement between Seoul and Washington that guarantees most-favored nation (MFN) treatment for Korean chipmakers, including Samsung Electronics Co. and SK Hynix Inc.
Under MFN rules, countries cannot apply tariffs more punitive than those applied to other trading partners.
“Until the US provides detailed policy guidelines, uncertainty will persist,” said a government official in Seoul. “But the chances of a 100% tariff on Korean semiconductors are considered low.”
(Graphics by Daeun Lee) Last month, the US and EU agreed to cap chip and pharmaceutical tariffs at 15%, effectively setting a ceiling for future bilateral deals, including those involving South Korea.
SAMSUNG, SK’S STRATEGIC US INVESTMENTS AS INSURANCE
Samsung and SK Hynix, Korea’s leading chipmakers and the world’s two largest memory chipmakers, have made pledges to significantly expand their US footprint – a move analysts say could shield them from harsher trade measures.
Samsung currently runs foundry manufacturing facilities in Austin, Texas Industry watchers said the Korean chipmakers are “well-positioned” to avoid punitive tariffs, given their US investment commitments.
Apple Inc. and Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), which have also pledged substantial investments in the US, are expected to be exempted from the proposed tariffs under Trump’s plan.
During a White House event announcing Apple’s new $600 billion investment plan, Trump said companies that produce domestically, or make firm commitments to do so, will be spared from the levies.
“Korea doesn’t export that many chips directly to the US. Most of the semiconductors go through Chinese or Taiwanese assemblers before reaching American consumers,” said an industry executive.
SK Hynix's DRAM plant in Icheon, Korea According to the Ministry of Trade, Industry and Energy, Korea exported $10.6 billion worth of chips to the US last year, accounting for just 7.5% of total semiconductor exports.
DOWNSTREAM RISKS, POLICY PRESSURE
Despite the relatively low exposure, the Korean chip industry isn’t entirely insulated.
Tariffs on upstream components can ripple through global supply chains, raising costs for final products such as smartphones, PCs and servers, potentially dampening consumer demand and, in turn, chip sales.
Analysts warn that Trump’s tariff rhetoric may also serve as a lever to extract further concessions from foreign manufacturers.
“With no US-based DRAM or NAND flash production, Korean firms could face pressure to localize more of their operations,” said a senior official at a Korean chipmaker. “It’s possible Washington could push Korean chipmakers to build new memory fabs on American soil in exchange for tariff exemptions.”
Samsung Electronics’ chip plant under construction in Taylor, Texas Another semiconductor executive in Seoul said, “It’s too early to say how the tariff will be implemented or what rates will apply to Korean exporters. We are working closely with the government to mitigate any fallout.”
Even with the safety net of MFN status and ongoing US investments, Seoul and its chipmakers remain wary of Trump's unpredictability – a factor that could continue to weigh on strategic planning until more clarity emerges.
“Trump has shown he’s willing to change policy direction at any moment,” said an industry official. “Until the details are out, the risk premium will remain.”
Write to Shin-Young Park, Jeong-Soo Hwang and Dae-Hun Kim at nyusos@hankyung.com In-Soo Nam edited this article.
