Korea Becomes Largest Investor in the U.S., but Trump Side Calls for "Semiconductor Act Subsidy Review"

Korea Faces Emergency as It Aggressively Increases US Investment Through Subsidies

The co-head of the Department of Government Efficiency (DOGE), which will be launched under the second Trump administration, expressed a position that it may reconsider the subsidies being provided by the Joe Biden administration to foster the semiconductor and clean energy industries.

Vivek Ramaswamy, who will lead DOGE alongside Tesla CEO Elon Musk, referred to an interview with Commerce Secretary Gina Raimondo in a post on X (formerly Twitter) on the 26th (local time), stating, “They are accelerating spending (subsidy payments for semiconductors) before the regime change,” and criticized it as “very inappropriate.” He also said on X the day before, “DOGE will review all these last-minute tactics and recommend that auditors closely investigate these last-minute contracts.”

Secretary Raimondo stated in a Politico interview on the 20th that the goal is to provide as many subsidies as possible before the inauguration of the Trump administration next year. The Semiconductor Act, enacted in August 2022, centers on providing subsidies to companies investing in factories to encourage semiconductor production within the United States.

DOGE is a department responsible for cutting federal bureaucracy, excessive regulations, and wasteful spending. Ramaswamy considers the Semiconductor Act subsidies to be wasteful subsidies.

For this reason, the Biden administration is finalizing agreements with subsidy beneficiary companies and executing related budgets as quickly as possible to prevent the Trump administration from overturning industrial policies such as the Semiconductor Act and the Inflation Reduction Act (IRA).

The problem is that among the companies selected by the Commerce Department as subsidy recipients, Samsung Electronics, SK Hynix, and Micron have not yet received subsidies. However, Secretary Raimondo said, “While the inauguration date of the Trump administration next year is a clear deadline, I am not overly concerned about the possibility of the subsidies stipulated in the Semiconductor Act being withdrawn.” Even if the Trump administration wants to cancel the subsidies, Republican lawmakers sensitive to budget cancellations related to their constituencies are expected to block such moves. The Biden administration announced on the same day that it will provide Intel with up to $7.866 billion and is reportedly in talks with other companies such as Samsung Electronics and SK Hynix.

If the Trump administration challenges the Biden administration’s subsidy payments by canceling contracts or reclaiming funds, it could cause significant disruptions to the businesses of Korean companies that have received or anticipated benefits from the Semiconductor Act and IRA and invested in the United States. Korea’s investment in the U.S. last year reached $21.5 billion, making it the largest investor in the U.S. While the proportion of U.S. investment in Korea’s overseas investments was only 18% in 2019, it surged to over 50% last year.