Protection racket? Asian semiconductor giants fear looming tariffs

For chipmaking powerhouses South Korea and Taiwan, the consequences of imaginable US tariffs could beryllium enormous. Photo: ANTHONY WALLACE / AFP
Source: AFP

Inside 1 of South Korea's oldest semiconductor probe institutes, the cleanrooms and workshops are calm and immaculate, but extracurricular the Seoul National University campus, a spot tempest is brewing.

Last month, Washington announced a nationalist information probe into imports of semiconductor technology, which could enactment the manufacture successful the crosshairs of President Donald Trump's commercialized bazooka and inflict perchance devastating levies.

For chipmaking powerhouses South Korea and Taiwan, the consequences could beryllium enormous.

South Korea is location to Samsung Electronics and SK hynix, portion Taiwan hosts the world's largest declaration chipmaker, TSMC. Collectively, they nutrient a important chunk of high-end chips that person go the lifeblood of the planetary economy, powering everything from smartphones to missiles.

Taiwan exported $7.4 cardinal worthy of semiconductors to the United States successful 2024, portion South Korea's exports surged to $10.7 billion, a historical high.

Experts accidental the spectre of looming tariffs has spurred stockpiling, with fears levies volition thrust up user prices and wounded chipmakers.

The wide volition of Trump's policies is to unit the Asian spot giants to relocate accumulation stateside, a erstwhile technologist astatine Taiwanese spot steadfast MediaTek told AFP.

South Korea and Taiwan are keenly alert of the strategical value of the semiconductor industry. Photo: ANTHONY WALLACE / AFP
Source: AFP

"TSMC going overseas to the US to physique fabs is similar paying extortion money," they said, adding that the projects hardly made a nett with margins "super low" successful high-cost America.

"From the American constituent of view, it's logical to sacrifice the remainder of the satellite for its ain interests, lone that we hap to beryllium the ones being sacrificed," the technologist said.

A 'heavy blow'

The US president's tolls could beryllium "quite complex", Kim Yang-paeng, elder researcher astatine Korea Institute for Industrial Economics and Trade (KIET), told AFP.

Rather than hitting the industry with a broad levy, the United States could people antithetic products specified arsenic HBM, which is indispensable for high-speed computing, and DRAM, which is utilized for memory.

Any important tariffs connected the sector, which relies connected analyzable manufacturing chains to nutrient high-end tech products, would beryllium a "heavy blow", the MediaTek technologist said.

Samsung, the world's largest representation chipmaker, and starring representation spot supplier SK hynix trust heavy connected indirect exports to the United States via China, Taiwan and Vietnam.

The Seoul National University semiconductor institute is urging the authorities to put much successful the sector. Photo: ANTHONY WALLACE / AFP
Source: AFP

For example, Samsung produces tv panels successful South Korea, which are past assembled into finished televisions successful Vietnam earlier being shipped to the United States.

For these companies, determination is "concern astir a diminution successful request owed to rising prices successful different sectors utilizing semiconductors", said Jung Jae-wook, prof astatine Sogang University.

Meanwhile, Seoul and Washington are negotiating a "trade package" aimed astatine preventing caller US tariffs earlier the July 8 expiration of Trump's intermission successful his "reciprocal" levies.

Few alternatives

US Trade Representative Jamieson Greer is expected to sojourn South Korea for the APEC commercialized ministers' gathering this week.

Experts accidental that successful the abbreviated term, chips similar HBM are little apt to beryllium impacted by tariff wars owing to beardown request driven by artificial intelligence.

And dissimilar galore different sectors specified arsenic the car manufacture -- which is already deed by tariffs -- "semiconductors person nary substitutes from the US perspective", said Kim Dae-jong, a prof astatine Sejong University.

Experts accidental the spectre of looming tariffs has spurred stockpiling. Photo: ANTHONY WALLACE / AFP
Source: AFP

It is besides not feasible to displacement spot accumulation wholly stateside, fixed America's constricted capacity, truthful immoderate measures "are improbable to beryllium sustained successful the agelong run", said Sogang University's Jung.

"There are not galore alternate countries (the United States) can trust connected for imports, making terms increases inevitable if tariffs are imposed," helium said.

While Washington is anxious to bolster home production, South Korea and Taiwan are keenly alert of the strategical value of the manufacture and are not apt to springiness up capacity.

For Taiwan, semiconductors are a substance of nationalist security, said Kim from KIET.

"Taiwan whitethorn grow its manufacturing beingness successful the United States, but important changes to its home semiconductor ecosystem are unlikely."

Back astatine the Seoul National University semiconductor institute, its director, Lee Hyuk-jae -- who is besides an extracurricular manager for Samsung -- spends his days urging the authorities to put much successful the sector, which helium says "holds large importance" for the country.

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Source: AFP