Korean industry minister embarks on U.S. visit to enhance chip, AI cooperation

S. Korea‘s Industry Minister Ahn Duk-geun arrives at Dulles International Airport near Washington, Apr. 10, 2024. [Photo by Yonhap]

South Korea’s Minister of Trade, Industry and Energy Ahn Duk-geun has embarked on his first visit to the United States since taking office on Wednesday, raising expectations for enhanced bilateral ties in future industry sectors such as chips, artificial intelligence (AI), and nuclear power.

According to the industry ministry, Ahn will meet with key figures from the U.S. administration, Congress, and major think tanks, including the secretaries of commerce and energy, in Washington D.C. during his trip that will run through Friday, local time.

The visit is expected to focus on strengthening the high-tech alliance between the two countries, which was agreed upon by the leaders of both countries.

Korea and the U.S. have held ministerial-level supply chain and commercial dialogue (SCCD) and energy ministerial meetings following President Yoon Suk Yeol‘s state visit to the U.S. in April 2023.

Established in 2022, the SCCD consists of four working groups, including advanced manufacturing and supply chain resilience, dual-use export controls, digital economy, and healthcare and healthcare technology.

One of the key issues expected to be discussed during Ahn’s latest visit is U.S. semiconductor subsidies.

In particular, given that Samsung Electronics Co. plans to more than double its investment in semiconductor production in Taylor, Texas, to $44 billion on April 15, the two countries are expected to check whether there are any obstacles to Korean companies’ investments in the United States.

The U.S. government‘s subsidy to Samsung Electronics is expected to be about $6~7 billion, the third-largest after Intel Corp. and Taiwan’s Taiwan Semiconductor Manufacturing Co. (TSMC). The specific amount is expected to be announced next week.

There may also be discussions on sensitive issues such as U.S.-led semiconductor export controls targeting China.

There is speculation that U.S. Secretary of Commerce Gina Raimondo may request Korea to join other allies, such as the Netherlands and Japan, in strengthening independent controls on exporting semiconductor equipment to China.

[Graphics by Song Ji-yoon and Yoon Yeon-hae]

The U.S. CHIPS Act of 2022 imposes a “guardrail” that restricts companies that receive subsidies from the U.S. government from expanding their semiconductor production capacity in China.

Under the guardrail, companies that have received U.S. government semiconductor subsidies must return the subsidies if they expand their production capacity in China by more than 5 percent for advanced semiconductors and 10 percent for general-purpose semiconductors in the pre-28 nanometer generation.

Another key item on the agenda is a discussion related to the U.S. Inflation Reduction Act (IRA) incentives.

The IRA is a program that provides subsidies for areas such as electric vehicles and renewable energy.

The intergovernmental role in strengthening Korea-U.S. nuclear cooperation is also expected to be addressed as the legal battle between Westinghouse Electric Company LLC and Korea Hydro & Nuclear Power Co. (KHNP) has become a source of uncertainty in Korea‘s nuclear exports to countries such as the Czech Republic.

In September 2023, a U.S. court dismissed a lawsuit filed by Westinghouse to block KHNP’s export of a nuclear power plant to the Czech Republic, saying that private companies do not have the right to sue.

Ahn told reporters after arriving at Dulles International Airport on the outskirts of Washington, D.C. on Wednesday that “basically, we are coordinating with our allies” on U.S.-led semiconductor export controls.

“But we are also making every effort to stabilize our relationship with China, especially in industrial and trade terms,” he added.