Semiconductor chips are seen on a printed circuit board on this illustration image taken Feb. 17, 2023. (Reuters-Yonhap)
Donald Trump’s second presidency is unsettling the chip business globally because the outspoken chief had publicly threatened throughout his marketing campaign to chop subsidies for chipmakers whereas elevating tariffs on international corporations.
South Korea, residence to the world’s prime two reminiscence chipmakers, isn’t any exception. Consultants recommend that Korean ought to leverage its strengths in synthetic intelligence chips and additional bolster ties with the brand new US administration.
One of many imminent issues is the opportunity of the Trump administration repealing the predecessor’s CHIPS and Science Act, geared toward attracting chipmakers to construct superior chip factories on American soil by offering billions of {dollars} of federal funding.
Trump has referred to as the act “so unhealthy,” and insisted that imposing tariffs is the best way to push firms to construct chip factories within the US, somewhat than by way of federal subsidies and tax credit.
If Trump tries to undergo the method of repealing the CHIPS and Science Act, it may deal a significant blow to Samsung Electronics and SK hynix presently constructing chip factories within the US and awaiting grants promised by the US Commerce Division for his or her vital investments.
Underneath the Biden administration, the US Commerce Division promised Samsung Electronics as much as $6.4 billion funding for the chip large’s building of a $45 billion chip foundry services in Taylor, Texas. SK hynix is ready for as much as $450 million of federal subsidies for its funding of $3.87 billion to construct a sophisticated chip packaging plant in Indiana.
Given Trump’s important remarks, many analysts predict he may try and undergo the method of repealing the bipartisan CHIPS Act. Others imagine Trump would seemingly try and make minor modifications, reminiscent of lowering the quantity of subsidies or change the workforce necessities for the continued tasks.
“The CHIPS Act did achieve attracting international chip services on the US soil, and can create jobs,” mentioned Lee Jong-hwan, a system semiconductor engineering professor at Sangmyung College. “Trump is an unpredictable determine so it’s onerous to foretell, however he would concentrate on the advantages of the CHIPS Act for the US, and is prone to make little changes.”
Republican presidential nominee and former US President Donald Trump takes the stage to handle supporters at his rally, on the Palm Seashore County Conference Middle in West Palm Seashore, Florida, US, Wednesday. (Reuters-Yonhap)
Trump’s envisioned excessive tariff coverage and decoupling technique to isolate China from the worldwide provide chain is anticipated to have each advantages and challenges for Korean chipmakers, consultants say.
Korean chipmakers may additionally profit in the long run when Trump’s excessive tariffs on chips made exterior of the US pressure firms to provide chips within the American soil, in accordance with Park Jae-geun, a professor of digital engineering at Hanyang College.
TSMC, the Taiwan-based foundry producing some 80 p.c of the world’s cutting-edge chips, stands as the favourite chip producer for international tech giants. Whereas the corporate produces majority of superior chips on the earth from its fabs in Taiwan, it won’t be able to produce all of the calls for from the 2 factories it’s presently constructing within the US, Park Jae-geun, a professor of digital engineering at Hanyang College, mentioned.
“So the probabilities would go up for Samsung to bag the remainder of the foundry orders that TSMC can’t take,” Park mentioned.
With Trump anticipated to bolster commerce curbs in opposition to China, Samsung and SK hynix might face difficulties in working their chip manufacturing services in China.
The Biden administration applied a sweeping set of laws to ban the export of sure semiconductor chips made utilizing US expertise and superior chip tools to China in 2022. For the 2 Korean chipmakers, the US has granted waivers permitting them to import instruments with out having to use for a license.
Underneath Trump, the Korean chipmakers might need to undergo complicated processes to use for the license.
In an effort to mitigate dangers and acquire negotiating energy in opposition to the Trump administration, Korea ought to leverage its technological edge in high-value AI chips, consultants mentioned.
“The paradigm in chip business is shifting quick in direction of high-value AI chips. No matter Trump does, Korean firms maintain an edge in AI reminiscence chips which are excessive in demand, and this needs to be their negotiating energy,” Lee of Sangmyung College mentioned.
Park echoed Lee’s view, noting how the US wouldn’t need to pressure relations with Korea when it goals to realize dominance within the AI business.
“US has main gamers within the AI sector, like Nvidia, Intel, Google and Apple. These firms want Korea’s AI chips, reminiscent of Excessive Bandwidth Reminiscence and CXL for development,” Park defined.
“Know-how is the negotiating card. The Korean authorities and chipmakers ought to work collectively to steer the Trump administration that we’re the important companion for its AI development.”
