Tension in Korean Semiconductor Industry as 'Chips Act' Faces Possible Repeal Amid Trump Election

Increased Uncertainty in Semiconductors

"Even the President Finds It Difficult to Amend Due to Legislative Matters"
"Could Actually Be an Opportunity for Korean Companies"

As former President Donald Trump’s chances of winning the U.S. presidential election increase, uncertainty in the domestic semiconductor industry has grown even more. The industry is expressing concerns about the possibility of tough trade policies, such as the repeal of the CHIPS and Science Act (CSA) and universal tariffs of up to 20%. However, since these are legislative matters, it is analyzed that it would not be easy for the president to completely revise semiconductor-related policies on his own, and there are also positive outlooks suggesting that this could actually present opportunities for Korea.

According to the industry on the 6th, the biggest concern among domestic semiconductor companies is the reduction of semiconductor subsidies. Korean semiconductor companies receive subsidy support for investments in the U.S. under the CSA, but if the CSA is reduced or subsidy conditions are decided in a way that is less favorable to domestic companies compared to before, they could face negative impacts such as financial pressure.

Former U.S. President Donald Trump. Yonhap News

Currently, Samsung Electronics and SK Hynix are set to receive subsidies and tax benefits of $6.4 billion (9 trillion won) and $450 million (620 billion won), respectively, through the CSA. Korean semiconductor equipment companies entering alongside them are also included as subsidy recipients.

Trump has consistently criticized the CSA. He recently appeared on a podcast and called the CSA a "really bad deal."

If Trump overturns the Biden administration’s subsidy policy by imposing tariffs instead of providing subsidies for advanced semiconductors, domestic semiconductor companies that have pushed for large-scale investments based on this will have to reconsider their existing investment strategies. Currently, with raw material and labor costs soaring, the cost burden of building U.S. plants for Samsung Electronics (Texas) and SK Hynix (Indiana) will increase further without support such as subsidies.

Kim Yang-pyung, a senior researcher at the Korea Institute for Industrial Economics and Trade, said, "Currently, semiconductors are traded worldwide tariff-free, and countervailing duties apply only between the U.S. and China, but in the worst case, Trump could intervene in this area."

However, there are also forecasts that the negative impact on Korean companies will not be significant as China sanctions intensify. Researcher Kim predicted, "They will check China more than they do us. First, they will block legacy (general-purpose) semiconductors, and American companies in China will accelerate their de-China efforts compared to now."

Do Won-bin from the Korea International Trade Association’s International Trade and Commerce Research Institute also argued, "There is currently no factor that could significantly shake the structure of the (Korean) semiconductor industry." He expressed skepticism about the feasibility of Trump’s campaign promises. Do said, "Although Trump talks about imposing tariffs, the likelihood of this becoming a reality is low. It is not easy legally to raise tariffs, the president does not have that authority, and historically, it has rarely happened."

The domestic semiconductor industry plans to carefully monitor the U.S.-China tensions while continuing efforts to maintain domestic technological capabilities. An industry insider explained, "The U.S. stance to check China is expected to intensify further. Since China cannot enter the fields where semiconductor companies are currently doing well, domestic companies need to focus more on widening the competitive gap in high value-added markets such as artificial intelligence (AI) memory." He added, "The on-device AI market did not take off this year, but it will rise next year. Leading companies related to AI will take the lead in this area."