South Korea and the United States are discussing semiconductor investments in the United States as part of wider economic negotiations between the two countries, with concerns over possible tariffs on imported chips adding pressure to the talks.
The semiconductor industry has become an increasingly important part of the relationship between Seoul and Washington. South Korea is home to some of the world’s largest memory chip manufacturers, while the United States is seeking to expand domestic semiconductor production and strengthen its supply chains. Against this backdrop, investment discussions between the two countries are taking place as Washington considers new measures aimed at encouraging chipmakers to manufacture more products within the United States.
A South Korean presidential official said on Friday that semiconductor investments were among the investment-related matters being discussed with the United States. The official was responding to questions about whether potential US tariffs on semiconductor imports were influencing negotiations over planned investments by South Korean companies.
“There are various issues between South Korea and the United States, and they are sometimes affecting each other,” the official said. The official added that semiconductors were included in the investment discussions currently taking place between Seoul and Washington.
The South Korean government is attempting to prevent disagreements over tariffs and other economic matters from interfering with investment plans. “We are making efforts to prevent them from hindering each other,” the official said.
The comments come at a sensitive time for the global semiconductor industry. The United States has been pushing to increase domestic chip manufacturing as governments and technology companies seek greater control over critical supply chains. Semiconductors are essential to everything from smartphones and computers to automobiles, data centres and advanced artificial intelligence systems.
US Commerce Secretary Howard Lutnick recently indicated that Washington was preparing a targeted approach to semiconductor tariffs. His remarks have raised questions for overseas chipmakers that supply the American market, particularly companies considering large-scale investments in US manufacturing facilities.
“If you don’t build here, expect to pay to enter the greatest market in the world,” Lutnick said in a televised interview.
The possibility of tariffs creates an important consideration for South Korean semiconductor companies. Building manufacturing capacity in the United States could help companies avoid some trade-related risks while also bringing production closer to one of the world’s largest technology markets. At the same time, such investments require enormous amounts of capital, long-term planning and access to skilled workers, infrastructure and reliable energy supplies.
The issue is particularly significant because South Korea has already committed to major investment plans in the United States. Under an agreement reached by the two countries’ presidents last year, South Korea pledged $350 billion in investment in US manufacturing.
The agreement also included provisions intended to protect South Korean chipmakers from being placed at a competitive disadvantage. Under the terms, South Korean semiconductor companies would receive US tariff rates that are “no less favourable” than those offered to another competitor conducting an equal or larger volume of chip trade.
For Seoul, that provision could become increasingly important if Washington introduces new semiconductor tariffs. The treatment of South Korean companies compared with chipmakers from other countries could influence future investment decisions and the pace at which manufacturers expand their US operations.
South Korea’s semiconductor industry has considerable importance to the country’s economy. Samsung Electronics and SK Hynix are among the world’s leading memory chip manufacturers, supplying products used by major technology companies across the globe.
Demand for memory chips has risen sharply as US technology companies accelerate spending on artificial intelligence infrastructure. AI systems require large quantities of advanced computing hardware and high-performance memory, increasing the strategic importance of companies capable of producing these components at scale.
The boom in artificial intelligence has therefore added another layer to the semiconductor relationship between South Korea and the United States. American technology companies are investing heavily in data centres and AI computing systems, while South Korean manufacturers are positioned as major suppliers of memory products needed for those systems.
For South Korean companies, expanding production in the United States could offer several advantages. Local manufacturing could bring them closer to American customers, reduce exposure to some international trade disruptions and strengthen their position within the US technology ecosystem. It could also support Washington’s broader goal of developing a more resilient domestic semiconductor supply chain.
However, overseas expansion also comes with challenges. Semiconductor factories require billions of dollars in investment and years of planning before they reach full production. Companies must also consider operating costs, labour availability, energy requirements, construction timelines and the broader business environment before committing to new facilities.
Tariff uncertainty can make those decisions even more complicated. If tariff policies change frequently, companies may find it difficult to calculate the long-term financial benefits of producing chips in the United States compared with manufacturing them elsewhere and exporting them to American customers.
The South Korean government is consequently balancing several interests at once. It wants to maintain strong economic ties with Washington, protect the competitiveness of domestic companies and ensure that major investment commitments do not create unnecessary disadvantages for Korean manufacturers.
The semiconductor negotiations are also taking place alongside discussions on national security. The South Korean official said negotiations with Washington on certain security-related matters had not been making progress. One issue involves Seoul’s plan to build a nuclear-powered submarine, which was part of discussions connected to the broader agreement reached last year.
The fact that trade, investment and security matters are being discussed at the same time highlights the increasingly interconnected nature of relations between South Korea and the United States. Decisions in one area can influence negotiations in another, making it more difficult for either government to treat individual issues in isolation.
For Washington, encouraging foreign semiconductor manufacturers to build facilities inside the country could support domestic industrial policy and reduce reliance on overseas supply chains. For Seoul, ensuring fair treatment for its companies remains a major priority as Korean businesses consider committing additional capital to the American market.
