South Korea, US in Chip Investment Talks Amid Potential Tariff Threat

South Korea and the United States are engaged in discussions regarding semiconductor investments in the U.S., a presidential official in Seoul confirmed on Friday. The negotiations are taking place amid concerns over potential new U.S. tariffs on imported chips, creating a complex backdrop for the bilateral talks.

Tariff Concerns Complicate Talks

A South Korean presidential official, speaking to reporters, acknowledged that the prospect of new U.S. tariffs was a factor in the ongoing investment negotiations. The official stated that various issues between the two nations can sometimes influence one another and that Seoul is making efforts to ensure the tariff issue does not hinder progress on investment matters.

The comments follow recent remarks by U.S. Commerce Secretary Howard Lutnick, who said this week that Washington was planning a "targeted, thoughtful tariff policy" on semiconductor imports. In a televised interview, Lutnick directly linked domestic manufacturing to market access, stating, "If you don’t build here, expect to pay to enter the greatest market in the world."

Context for Investors

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The current discussions are critical for South Korea's tech giants, Samsung Electronics and SK Hynix, the world's two largest memory chipmakers. These firms are central to the global supply chain, particularly as U.S. technology companies increase demand for advanced chips to build out artificial intelligence infrastructure.

Key points for context include:

• A deal struck last year included a $350 billion South Korean investment pledge for U.S. manufacturing.
• That agreement stipulated that South Korean chipmakers would receive U.S. tariff rates "no less favourable" than those offered to major competitors.
• The Seoul official also noted that separate negotiations with Washington on national security issues, including South Korea's plan for a nuclear-powered submarine, had not been making progress, highlighting the multifaceted nature of the U.S.-South Korea alliance.