CHIPS Act, IRA top business delegation's agenda

Thorny trade issues in semiconductors and electric vehicles will likely emerge as top agenda items when President Yoon Suk Yeol's delegation — comprising 122 business leaders including the heads of Samsung Electronics, Hyundai Motor, LG...

Samsung Electronics Executive Chairman Lee Jae-yong, first from the right, attends the Korea-Japan business roundtable with other heads of Korean conglomerates held in Tokyo on March 17. [YONHAP]

Thorny trade issues in semiconductors and electric vehicles will likely emerge as top agenda items when President Yoon Suk Yeol's delegation — comprising 122 business leaders including the heads of Samsung Electronics, Hyundai Motor, LG Corporation and SK Inc. — meet with their counterparts during a state visit to the United States.

Leaders of Korea’s major conglomerates, including Samsung Electronics Executive Chairman Lee Jae-yong, Hyundai Motor Group Executive Chair Euisun Chung and LG Corporation Chairman Koo Kwang-mo, accompany Yoon on a weeklong trip overseas, senior presidential secretary for economic affairs Choi Sang-mok said during a press briefing held at the Yongsan presidential office in central Seoul on April 19.

“The business delegation, unprecedented in size, will join the state visit and discuss cooperation measures through various channels,” said a source from the business industry. “Samsung Electronics and SK hynix will convey their concerns about the CHIPS and Science Act, and Hyundai Motor about the Inflation Reduction Act [IRA], to reach an agreement of some form.”

Besides Lee, Chung and Koo, the 122-member delegation includes heads of other major businesses such as Lotte, Hanwha Corporation, GS Holdings, HD Hyundai, CJ, Korean Air Lines, Doosan Corporation, LS and Hyosung.

Tackling the U.S. government’s subsidy guidelines is a top priority for the delegation. The CHIPS and Science Act provides $52.7 billion in total over five years for semiconductor research, development, manufacturing, and workforce development in the United States. However, the semiconductor act stipulated unfavorable provisions for foreign companies, requiring them to provide corporate secrets, return excess earnings to the U.S. government and abide by investment guardrails against China.

Samsung Electronics and SK hynix plan to minimize the scope of their business secrets to submit to U.S. authorities and lift some of the guardrails. Samsung Electronics is building a $17 billion chip plant in Taylor, Texas, and SK hynix is raising $1.5 billion to invest in new packaging facilities in the United States.

U.S. Commerce Secretary Gina Raimondo told CNBC earlier in the month that over 200 companies have submitted a statement of interest (SOI) for CHIPS Act funding. Samsung Electronics declined to confirm whether it has submitted the statement and SK hynix said it plans to apply for the grants after finalizing the construction site’s location.

For cars, the IRA is the issue at hand. Hyundai and Kia last week failed to make the list of 22 beneficiaries entitled to qualify for a maximum of $7,500 tax credit.

Yoon is also accompanied by leaders of major business umbrella groups, namely, the Federation of Korean Industries (FKI), Korea International Trade Association, Korea Federation of SMEs Korea Enterprises Federation and Federation of Middle Market Enterprises of Korea.

The largest business delegation since Yoon took office in May last year aims to utilize its global networks to add to Yoon’s efforts to boost Korea-U.S. economic ties and ink preliminary agreements for cooperation among companies and government agencies.

A business leaders’ forum for high-tech industries organized by FKI and American Chamber of Commerce in Korea, a round table for small and medium-sized enterprises hosted by the Ministry of SMEs and Startups and a welcome event at the White House are scheduled this week.

Samsung Electronics Executive Chairman Lee is expected to have an extended overseas trip before he returns to Korea for the next public hearing regarding Samsung C&T's merger scheduled for May 26. Lee will inspect Samsung's semiconductor, telecommunication, battery and bio businesses and pay visits to CEOs of major global companies.

BY KO SUK-HYUN [sohn.dongjoo@joongang.co.kr]