Portion of U.S. trade package for chips remains unclear

Korean chip firms cautiously welcomed a new trade agreement struck between Korea and the United States on Wednesday, as the deal provided much-needed clarity on exports, but it remains to be seen how much of the total investment will go toward chips.

U.S. President Donald Trump said he was ″pleased to announce that the United States of America has agreed to a Full and Complete Trade Deal with the Republic of Korea” along with this image in a post uploaded to the White House's official account on X on July 30. [SCREEN CAPTURE]

Korean chip firms cautiously welcomed a new trade agreement struck between Korea and the United States on Wednesday, as the deal provided much-needed clarity on exports.

However, uncertainty remains over how much of the promised $200 billion in U.S.-bound investment — part of the broader $350 billion package excluding shipbuilding — will go toward chipmaking.

“The deal resolves export uncertainty,” said Samsung Electronics and the Korea Semiconductor Industry Association (KSIA) in response to the agreement.

Industry sentiment was further buoyed by comments from U.S. Commerce Secretary Howard Lutnick, who said Korea “will also not be treated any worse than any other country on semiconductors."

Under the terms of the deal reached on Wednesday, both countries agreed to U.S. tariffs of 15 percent and a Korean investment package of $350 billion in the United States. Of that, $200 billion will be spread across industries such as semiconductors, batteries, biotech and energy.

But the precise share allocated to semiconductors remains unclear.

Kim Yong-beom, director of national policy, said “the portion of direct investment within the $200 billion figure will be very low" at a presidential briefing on the deal held Thursday in Yongsan District, central Seoul.

Yet speculation about further semiconductor investments has grown following recent developments.

Samsung’s recent foundry contract win from Tesla and Executive Chairman Lee Jae-yong’s unexpected trip to Washington, reportedly to assist in the tariff talks, have prompted analysts to project increased capital commitments.

The SK hynix logo is seen at the firm's heaquarters in Icheon on July 24. [YONHAP]

Samsung and SK's $40.87 billion commitment

Samsung and SK hynix previously announced $40.87 billion in U.S. chip investments. Samsung committed $37 billion to its Taylor, Texas, foundry, while SK hynix is investing $3.87 billion in a high bandwidth memory (HBM) packaging plant in West Lafayette, Indiana.

“These investment plans, including previously announced ones like Samsung’s Taylor fab, will be factored into the total amount discussed at the [Korea-U.S.] summit,” said Yoon Sung-hyuk, industrial policy secretary at the presidential office.

He added that although some investments were announced under the former Joe Biden administration, “like the Tesla contract, some will be executed primarily under the second Donald Trump administration.”

This has revived attention around Samsung’s previously shelved plan for a $7 billion advanced packaging facility. The company originally slated $44 billion for investment in Taylor but paused the plan after failing to secure enough foundry clients.

Now that Samsung has landed a $16.5 billion foundry deal with Tesla, industry watchers believe the company may revive its packaging investment.

However, both Samsung and SK hynix maintain there is “no decision yet” on additional investments.

Samsung Electronics Executive Chairman Lee Jae-yong, fifth from right, and Tesla CEO Elon Musk, sixth from right, pose for a photo at Samsung Electronics Device Solutions America semiconductor research facility in the United States on May 10, 2023. [SAMSUNG ELECTRONICS]

Samsung eyes expansion

During Samsung Electronics’ earnings call on Thursday, Chief Financial Officer Park Soon-chul said the company is pushing forward with the Taylor fab, targeting orders from various advanced chip clients in the United States.

“This year’s investment in Taylor will remain within the current capital expenditure,” he said. “Next year, we expect a year-on-year increase.”

The KSIA issued a statement noting that the tariff agreement “alleviates export uncertainties in the semiconductor sector,” and said it “presents an opportunity to expand business with U.S. firms, which are at the center of AI-driven chip demand and technological ecosystems.”

Trade containers are stacked at a port in Incheon on July 31. [NEWS1]

Uncertainty lingers

Despite the optimism, industry players are closely watching for the detailed product-level U.S. tariffs expected in August. The upcoming list for chips and pharmaceuticals could undercut the broader 15 percent tariff deal if high rates are imposed.

Jang Sang-sik, head of trade trend analysis at the Korea International Trade Association, warned that chip tariffs could reach as high as 25 percent.

"With general tariffs set at 15 percent, semiconductors may be hit with 25 percent," he said. “If U.S. Big Tech pushes back, the Trump administration might include exception clauses and later adjust the rates.”

Adding to the uncertainty is the issue of U.S. subsidies for Korean chipmakers.

Samsung and SK hynix secured a total of $5.2 billion in subsidies during the Biden administration, but the outlook under Trump is unclear.

Commerce Secretary Lutnick said earlier this year that the subsidies seemed "overly generous,” and the AI Action Plan released by the White House on July 23 omitted any mention of direct semiconductor subsidies.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY YI WOO-LIM [kim.juyeon2@joongang.co.kr]