Government Vows to Protect Chipmakers Amidst U.S. Tariff Concerns
South Korea has stated its intention to actively engage with the United States to secure favorable terms regarding potential tariffs on imported artificial intelligence chips. A presidential spokesperson announced on Sunday that the government will pursue direct negotiations with the U.S. to safeguard the interests of its domestic chip manufacturers.
The primary focus of these efforts is on protecting major South Korean exporters of memory chips, Samsung Electronics and SK Hynix. While Donald Trump's recent proclamation concerning tariffs might not immediately impact these companies, the South Korean government is taking proactive measures to mitigate any potential adverse effects.
Government officials have reminded reporters of a joint fact sheet published last year between South Korea and the U.S., which stipulated that South Korea would not face discriminatory tariff treatment compared to other chip-producing nations. This agreement is now facing scrutiny as the new tariff order initially targets specific types of advanced chips, with the possibility of broader implications in the future.
U.S. Tariff Order Targets AI Chips, with Potential for Expansion
South Korea's Minister of Trade, Yeo Han-koo, clarified on Saturday that the new tariff plan announced by the U.S. primarily affects high-end artificial intelligence chips, rather than memory chips. He noted that the initial measures announced appear to focus on advanced chips manufactured by companies such as Nvidia and AMD.
Minister Yeo pointed out that the memory chips typically exported by South Korea are not included in this initial phase, suggesting that the immediate impact is expected to be limited. However, he emphasized that the government remains vigilant and cautious, stating that it is not yet time to be reassured. The scope of future phases remains uncertain, and the government is committed to working closely with local companies to ensure the most advantageous outcome for South Korea.
The tariff proclamation, signed by Donald Trump on Wednesday, cites national security as the rationale for imposing a 25% duty on AI chips like Nvidia's H200 and AMD's MI325X. The White House has described the scope as "narrow," indicating that the tariffs will not apply to chips imported for U.S. data centers, public sector applications, consumer electronics, startups, or civil industrial uses that do not involve data centers.
Despite these specific exclusions, the underlying implications of the fact sheet suggest that broader tariffs are a possibility. The U.S. could extend these measures to encompass a wider array of chip types and related products, aiming to incentivize domestic production. The underlying message appears to be that chipmakers that do not establish manufacturing facilities within the U.S. may face significant taxation.
U.S. Commerce Secretary Howard Lutnick has previously stated that South Korean and Taiwanese chipmakers failing to invest in the U.S. could be subject to tariffs as high as 100%. He articulated this stance by saying, "If you want to sell in America, you should build in America," during the groundbreaking ceremony for Micron's new plant in New York.
These new regulations stem from a nine-month investigation conducted under Section 232 of the Trade Expansion Act of 1962. The investigation specifically examined advanced chips that meet certain performance benchmarks, as well as the associated hardware.