Subsidies, market share on the line for Korean chipmakers with U.S. election
Published: 17 Oct. 2024, 11:30
Updated: 17 Oct. 2024, 11:40
- 박은지
- park.eunjee@joongang.co.kr
Audio report: written by reporters, read by AI
With semiconductors at the center of a U.S. push to secure technological supremacy over China, many believe that both Vice President Kamala Harris and former President Donald Trump will likely maintain existing chip export and technology controls against the biggest Asian economy.
As far as the CHIPS and Science Act — from which many Korean chipmakers benefit — is concerned, however, a Trump win comes with higher uncertainties.
Signed into law by incumbent President Joe Biden in 2022, it authorizes about $280 billion for creating or expanding U.S.-based chip manufacturing facilities.
"Taking a cue from his presidency, where Trump drew up a series of policies and measures that favor U.S. firms, there is a possibility that he will reform the bill in a way that prioritizes his own country,” said Lee Jong-hwan, System Semiconductor Engineering professor at Sangmyung University.
“In that case, Korean firms will be put at a disadvantage as the current act allocates subsidies in a fair manner,” the professor said.
Under the act, Samsung Electronics secured a subsidy of $6.4 billion for its $45 billion chip investment in Texas, and SK hynix was granted $450 million for its $3.9 billion chip-packaging facility in Indiana.
On the other hand, experts predict that Harris will likely keep the CHIPS Act in place without any major change as her campaign website highlights the candidate’s role in introducing the bill.
“As president, Kamala Harris will build on this administration’s progress to ensure American industries and workers thrive,” it noted, adding that “Vice President Harris will continue to support American leadership in semiconductors, clean energy, AI and other cutting edge industries of the future.”
Still, the Democratic candidate has not yet offered concrete plans on how to facilitate the growth of the U.S. semiconductor industry, while Trump has consistently expressed skepticism over the large-scale chip subsidy program and lashed out at other countries for detrimentally impacting the United States.
In an interview with Bloomberg in June, Trump accused Taiwan of “taking about 100 percent of our chip business,” adding that the country should pay the United States for defense.
Beyond the CHIPS Act front, experts have mixed views on the effect of the election's outcome on Korean chipmakers.
The Korea Institute for Industrial Economics & Trade predicted in a report that a Harris administration could translate into a reduced market share for Korean chipmakers with the likely easing of restrictions on Chinese tech manufacturers compared to Trump.
Such a move is expected to lead Chinese device makers tap homegrown chipmakers, which would in turn erode the sales of Korean competitors.
A Trump presidency, on the other hand, could be a boon for Korean chipmakers by reducing the clout of Chinese competitors.
"If Trump toughens the degree of restrictions against Huawei or other Chinese manufacturers, it will result in containing the growth of competitors,” the research institute projected.
Another important area of concern in the chip segment is whether the incoming administration will maintain key waivers for Samsung Electronics and SK hynix.
“The United States is rumored to be preparing for further export restrictions to cut China off from advanced AI systems, which could possibly include the export of high bandwidth memory to China,” said Yeon Won-ho, the director and a professor at the Korea National Diplomatic Academy who specializes in U.S.-China economic relations.
“If realized, however, it will stop short of having a practical impact [on Korean chipmakers] as the stance is primarily designed to garner support during the campaign season,” he said.
“What matters is the indefinite waiver Korean chipmakers were granted by the United States last October,” he noted.
Washington indefinitely extended waivers granted to Samsung and SK hynix on a requirement for licenses to bring U.S. chip equipment to China.
BY PARK EUN-JEE, JIN EUN-SOO, LEE JAE-LIM [park.eunjee@joongang.co.kr]
with the Korea JoongAng Daily
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