South Korea Confirms Chip Investment Talks with US as Tariff Threat Grows
September 4, 2026 – 9:28 am
South Korea flag and Street scenery of between Hongdae and Hapjeong station in Seoul, Korea.
Credit: 2p2play via Shutterstock.com
South Korea has confirmed negotiations for tariff protection for its chipmakers with the US, as Washington signals plans for targeted semiconductor import tariffs. This follows a statement from Howard Lutnick, US Commerce Secretary, who said: "If you don’t build here, expect to pay to enter the greatest market in the world."
The agreement struck between the two countries includes South Korea committing $350 billion towards US manufacturing investment in exchange for tariff terms "no less favourable" than those given to competitors. However, a disagreement arises from the clause promising parity rather than exemption from tariffs.
Samsung Electronics and SK Hynix, the world’s largest memory makers, have seen demand rise due to AI infrastructure development in the US. Washington leverages this to push for more domestic chip manufacturing while Seoul seeks protection for its industry.
Analysis suggests that Korean firms need approximately six and a half times more investment to match TSMC’s American footprint. Despite this, domestic build-out continues, with SK Hynix investing $720 billion in memory fabs at Yongin and Seoul exploring a second chip cluster.
SK Hynix has also listed for $29 billion in the US, raising funds from American investors without relocating production. The circularity in the tariff plan influences AI data centre build-out, as Samsung and SK Hynix supply memory to these centres.
Negotiations extend beyond chips, with talks on South Korea’s planned nuclear-powered submarine program also stalled. Issues between the two countries often intertwine, meaning concessions in one area can be traded against others. However, no specific figures for additional US chip investment have been disclosed yet.