January 31, 2025
SEOUL – Korean chipmakers are on edge over the fate of their substantial investments in building advanced fabs in the US, following remarks from US President Donald Trump’s pick to lead the Commerce Department, Howard Lutnick, who revealed the administration’s intention to review the critical subsidies promised by the previous administration.
Lutnick, a billionaire financier, called former President Joe Biden’s CHIPS and Science Act an “excellent down payment” for bringing chip manufacturing to the US but said in his Senate confirmation hearing Wednesday that he will review the deals Biden made with global chipmakers to support their investments.
“I can’t say that I can honor something I haven’t read,” Lutnick said, responding to a question on whether he would follow through on the CHIPS program’s disbursal of federal funds to chip manufacturers.
“To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get the benefit of the bargain.”
The nominee maintained that revitalizing US chip manufacturing is crucial and said the chips support program is “an excellent down payment as a structure.”
For Korean chipmakers Samsung Electronics and SK hynix, which are investing tens of billions of dollars to build advanced chip manufacturing facilities in the US, the possibility of adjustments to the terms of their hard-won subsidies is raising concerns.
Samsung, the world’s largest memory chip maker, is investing over $37 billion to build chip fabs in Texas and has been promised $4.74 billion in direct funding. SK hynix, the second-largest memory chip maker, has secured $485 million in federal funding for its investment of about $3.87 billion in building an advanced chip packaging plant in Indiana.
“Korean chipmakers have planned their investments under the premise that they will get the US federal subsidies. I mean, it’s more expensive to manufacture in the US, and the current market conditions are not the most favorable for companies to expand overseas,” Burm Jin-wook, an electronic engineering professor at Sogang University, said.
“They would be put in very difficult positions if subsidies are slashed. They already have other problems (such as securing customers) to guarantee profit in those US fabs.”
On Monday, Trump also denounced the CHIPS Act in remarks that largely took aim at TSMC, the Taiwan-based contract chip manufacturer producing the majority of the world’s advanced chips.
“(Chipmakers) left the country and went to Taiwan. We want them back, and we don’t want to give them billions of dollars like this ridiculous program Biden has. They already have billions. They have nothing but money,” Trump said, adding that he plans to impose tariffs on foreign-produced chips without elaborating.
Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung University, said it will not be easy for the Trump administration to discard the CHIPS program entirely, despite the hardline stance.
“The remarks can be interpreted differently. But the reality is that the US absolutely needs the high bandwidth memory chips that SK hynix and Samsung produce. So it cannot simply overlook the Korean companies,” Lee said.
With SK hynix in the lead, the two Korean chipmakers are currently dominating the market for leading-edge HBM chips — the crucial components used to enhance artificial intelligence processes for graphics processing units. The only other chipmaker that can produce AI memory chips is US-based Micron Technology, which has less than a 10 percent share of the market.
Even if the Trump administration decides to reduce the subsidies, it is still important for Korean companies to keep up their investment in the US in the future, Lee said.
“It is crucial for Korean firms, especially Samsung, to keep expanding their presence in the US, even when they see near-term losses. Securing sustainable connections with big tech in the US is the way to survive,” Lee said.