Biden-Aligned Business Circles Likely to Detail US Investment Plans

Vice Chairman Lee Jae-yong to Meet President Biden on the 20th
Expectations for Discussions on U.S. Investment and Supply Chain Cooperation
LG, SK, Hyundai Motor, and Others Also Decide on U.S. Investments

[Image source=AP Yonhap News]

With U.S. President Joe Biden's visit to South Korea, movements within the business community are also picking up pace. Major groups are discussing ways to concretize their 'investment plans in the U.S.' during Biden's visit. This is analyzed as an effect of the U.S.-South Korea alliance, centered on security, advancing to a 'global alliance' encompassing economics, advanced technology, and supply chains.

According to the business community on the 19th, on the first day of Biden's visit (the 20th), he is expected to visit Samsung's semiconductor plant with President Yoon Suk-yeol and discuss Samsung's investment in the U.S. and supply chain cooperation.

During his meeting with Samsung Electronics Vice Chairman Lee Jae-yong, President Biden may urge further expansion of investment in Samsung's semiconductor plant in Taylor, Texas. Samsung also views the meeting with President Biden as a good opportunity to secure additional incentives for its U.S. semiconductor plant. Samsung Electronics is set to begin construction next month on a large-scale semiconductor plant in Taylor, Texas, worth 20 trillion won. The plant aims to start operations in 2024.

Hyundai Motor Group is also aligning with the Biden administration's push to expand electric vehicle (EV) adoption in the U.S. Last year, Hyundai Motor Group announced plans to invest $7.4 billion (approximately 9 trillion won) locally by 2025 to develop and produce future mobility solutions, including electric vehicles. This was the largest investment amount announced among global automobile and parts companies in the U.S. last year.

Following last month's decision to convert facilities at Hyundai's U.S. plant for new electric vehicle production, the group is coordinating plans to announce the establishment of a dedicated EV plant during Biden's visit. The site is expected to be in Georgia, where Kia's existing vehicle assembly plant is located, marking Hyundai Motor Group's first overseas dedicated EV plant. As electric vehicles align with the global trend toward eco-friendliness, leading global automakers are racing to develop them, and the U.S. government is actively seeking to attract production facilities.

From Hyundai Motor Group's perspective, the U.S. has emerged as the largest single sales market, increasing the necessity to establish local production systems to respond swiftly to demand.

South Korea's three major battery companies?LG Energy Solution, SK On, and Samsung SDI?have already planned investments exceeding 17 trillion won in North America by 2025. They plan to establish seven joint venture factories and four wholly owned factories across the U.S., Canada, and other parts of North America.

With active alliances forming between automakers and battery companies, there is also a possibility of new investment plans being announced in line with Biden's visit.

LG Energy Solution leads with 9.9 trillion won, followed by SK On with an estimated 6.45 trillion won, and Samsung SDI with an estimated 1.15 trillion won. According to the U.S. Department of Energy (DOE), among the 13 large-scale battery production facilities planned for construction in the U.S. by 2025, 11 belong to these three Korean battery companies. If investments proceed as planned, the share of domestic companies' facilities in total U.S. battery production capacity will expand from the current 10% level to about 70%.

Lotte is also expected to draw attention for its bio business, which it recently officially entered, along with businesses such as Lotte Chemical that have already expanded into the U.S. Lotte recently acquired the Bristol Myers Squibb (BMS) biopharmaceutical production plant in Syracuse, New York, for $160 million (approximately 200 billion won). Additional investments to strengthen capabilities in new product orders and process development, as well as plans to establish a U.S. corporation for sales operations in North America, are underway.

Lotte plans to invest about 2.5 trillion won over the next decade in the biopharmaceutical business, which it has identified as a new growth engine. Lotte Chemical was the first Korean petrochemical company to pursue investment in a shale gas ethane cracker project in the U.S.