US chip tariff plans could derail South Korea’s three semiconductor megaprojects

Washington is preparing a semiconductor tariff policy built around a simple demand: companies that manufacture chips in the United States would pay less, while those that do not could face higher costs entering the American market.

Commerce Secretary Howard Lutnick confirmed the plan in an interview with CNBC on the sidelines of the G20 Innovation Ministerial in Chapel Hill, North Carolina. He described it as a “targeted, thoughtful tariff policy” and said, “If you build here, you don’t pay, but if you don’t build here, expect to pay to enter the greatest market in the world.” He added that “all the companies know [the tariffs are] coming.”

The proposed regime could offer lower rates to companies investing in US chip production and impose higher tariffs on companies that do not. Lutnick compared the approach with the Trump administration’s policy on pharmaceuticals, saying, “We gave tariff relief to companies who built their innovative pharmaceuticals in America and did MFN (most-favored-nation). So that’s what you should look for in semiconductors.”

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If you build here, you don’t pay, but if you don’t build here, expect to pay to enter the greatest market in the world.

The pressure directly affects South Korean chipmakers and a joint government-industry plan to build major semiconductor complexes in Yongin, south of Seoul, and in the southwest Honam region. The projects aim to establish South Korea as a leading base for advanced chips used in artificial intelligence. Lutnick had already urged Samsung and SK Hynix in July to build production facilities in the United States.

The potential tariffs may reach beyond semiconductors themselves. Politico reported that the administration was considering duties on finished products containing chips, such as laptops, gaming consoles and servers for AI data centers. Lutnick said that report was “exactly right.” The United States currently applies semiconductor tariffs to certain products, including advanced AI chips such as Nvidia’s H200 when imported and then reexported. Chang Sang-sik of the Korea International Trade Association said Washington was steadily increasing pressure on foreign chipmakers.

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We gave tariff relief to companies who built their innovative pharmaceuticals in America and did MFN (most-favored-nation). So that’s what you should look for in semiconductors.