TLDRs;
- Trump’s proposed 25% tariff could slash billions from Samsung and SK hynix’s annual revenue.
- Global chip supply chains face renewed pressure as trade tensions escalate.
- Korean dominance in memory chips gives Seoul leverage in tariff negotiations.
- U.S. factory investments may help Korean firms soften the tariff blow.
Samsung and SK hynix are staring down multi-billion dollar setbacks as former U.S. President Donald Trump reignites tariff talk, targeting South Korean imports with a sweeping 25% levy.
The proposed measure, outlined in a letter addressed to South Korean President Lee Jae Myung, is set to take effect on August 1 if implemented. It marks one of the most aggressive steps yet in Trump’s protectionist agenda, this time zeroing in on two of the world’s most influential semiconductor producers.
The potential fallout is staggering. Samsung Electronics’ Device Solutions division, a cornerstone of its semiconductor business, could lose as much as 4.78 trillion won (approximately $3.5 billion) based on its 2023 sales figures.
SK hynix, another dominant player in the memory chip space, is estimated to face a 2.85 trillion won, or $2.1 billion, revenue drop. Together, these companies anchor South Korea’s role in the global chip ecosystem, which has already been strained by supply chain issues and rising geopolitical tensions.
US Tariff Threat Rattles Korean Tech Leaders
Trump’s tariff proposal accompanies a broader investigation under Section 232 of the Trade Expansion Act. U.S. Commerce Secretary Howard Lutnick confirmed that findings are expected before the end of July.
While framed as a move to protect American industry and drive domestic manufacturing, analysts warn that the ripple effects could extend far beyond Korean borders, potentially choking innovation and pushing up costs for U.S. companies dependent on these critical components.
The global semiconductor industry has learned hard lessons from past trade frictions. The U.S.-Japan Semiconductor Agreement of 1986, which sought to limit Japanese chip dominance, backfired by inflating prices and undermining competitiveness for American tech firms. That experience looms large over current debates, as experts caution against repeating history.
Supply Chains and AI Ambitions in the Balance
Memory chips form the backbone of many U.S. tech firms’ operations. Korean firms are global leaders in this niche, giving them considerable leverage.
South Korea has emphasized this mutual dependence in its outreach to U.S. officials, warning that blanket tariffs could harm not only Korean exporters but also U.S. ambitions in artificial intelligence and high-performance computing.
Professor Lee Jong-hwan, a leading voice on trade strategy, has argued that imposing high tariffs on memory chips would yield minimal benefit for the U.S., which lacks readily available alternatives. In his view, the U.S. would simply pass higher costs down to domestic industries, weakening competitiveness across the board.
Korean Firms Eye U.S. Expansion as Strategic Pivot
In response, Samsung and SK hynix may find opportunity amid the uncertainty. Both companies have been ramping up investments in U.S. manufacturing, a move that now doubles as a shield against tariffs. Building facilities closer to key American clients not only offers potential tariff exemptions but also strengthens their role in the U.S. supply chain.
According to trade analysts, this strategy reflects a broader trend of companies reshaping operations to weather geopolitical headwinds. During the U.S.-China trade war, firms that diversified production emerged more resilient. Korean chipmakers could follow a similar path, using U.S. investments as leverage in negotiating long-term trade stability.
