Seoul officials quickly reassure that Samsung, SK hynix would avoid 100% tariffs under most-favored nation protection
US President Donald Trump said he plans to impose a tariff of about 100 percent on imported semiconductors unless companies manufacture in the US, putting South Korean chipmakers such as Samsung Electronics and SK hynix on edge.
“We’ll be putting a tariff of approximately 100 percent on chips and semiconductors,” Trump said at the White House event on Wednesday, where Apple CEO Tim Cook announced the company’s additional $100 billion investment in the US.
Trump pointed to Apple and said if companies made a commitment to invest and manufacture chips in the US, they would not face the levies.
"So, (a) 100 percent tariff on all chips and semiconductors coming into the United States," he said. "But if you've made a commitment to build, or if you're in the process of building, as many are, there is no tariff."
However, key details about the tariffs, which could be officially announced next week, remain unclear, particularly regarding the level of domestic manufacturing companies are required to qualify for the exemptions.
Semiconductors represented South Korea’s second-largest export to the US in 2024, totaling $10.6 billion and comprising 7.5 percent of the country’s overall exports to America. While this share is smaller than Korea’s exports to China or Hong Kong, industry watchers caution that the potential disruptions to global supply chains could be significant.
South Korea’s leading memory chip-makers, Samsung Electronics and SK hynix, are said to have engaged in strategic discussions to mitigate risks from any future trade policies.
“We are closely monitoring the situation,” an official at Samsung Electronics said.
“There’s a lot of uncertainty around the announcement, as to the timeline and what kind of semiconductor type or product use will be affected,” said a semiconductor industry official in condition of anonymity.
“Trump hasn’t named specific categories of chips, like memory or system, and that makes predictions difficult. Depending on how the tariffs are applied, the impact could vary widely.”
The concerns come despite cautious optimism that Seoul secured most-favored-nation status through the latest tariff agreement with the US announced last week. However, MFN only guarantees the lowest available tariff rates, not a complete exemption.
Following last week's breakthrough tariff deal between the two countries, Deputy Prime Minister and Finance Minister Koo Yun-cheol said Korea would receive treatment no worse than any other country on future tariffs on chips and pharmaceuticals.
Observers suggest that Korean companies may face roughly 15 percent tariffs on chips, equivalent to the rate imposed on EU-made chips.
Amid growing unease, South Korea's top trade envoy Yeo Han-koo, who led tariff talks with Washington, assured that Samsung and SK hynix will not be subject to 100 percent duties.
“We secured most-favored nation treatment in the latest trade negotiations, especially in areas like semiconductors and bio sectors in the future,” Yeo said in a radio interview with broadcaster SBS on Thursday.
“In other words, we made sure that Korea would not be treated less favorably than other countries. If the US semiconductor tariff rate for MFNs is set at 15 percent, South Korea will also get 15 percent regardless of the rate going up to 100 percent or 200 percent.”
Asked whether Samsung and SK hynix will face 100 percent duties, Yeo replied they won't.
Samsung has invested in building two new advanced fabrication plants and a research and development facility in Texas, while SK hynix has also revealed plans to establish an advanced chip packaging plant and an R&D facility for AI products in Indiana.
These local manufacturing efforts, along with Samsung's recent announcements to expand production of chips in its Texas facility, could suffice for tariff exemptions, observers say.
On Thursday, Apple said that Samsung will manufacture the chips for its flagship iPhone at Samsung's plant in Austin, Texas. The announcement follows Samsung's recent $16.5 billion chip supply deal with Tesla.
sahn@heraldcorp.com
