Trump's 25% Tariff on AI Chips Raises Concerns for Korea's Semiconductor Sector

Post by : Bianca Suleiman

In a major policy shift, U.S. President Donald Trump has implemented a 25 percent tariff on specific advanced semiconductor chips, including Nvidia’s H200 AI accelerators, introducing new uncertainties to the global semiconductor landscape.

As detailed in a White House announcement and accompanying fact sheet, this tariff targets advanced computing chips including Nvidia H200 and AMD MI325X. This decision aligns with the broader initiative in Washington to bolster domestic semiconductor production.

Notably, the White House has specified that this tariff won’t impact chips imported for the purpose of enhancing the U.S. technology supply chain or domestic semiconductor production.

Consequently, chips like the H200, produced in Taiwan, sent to the U.S., and subsequently re-exported to China will incur the 25 percent tariff.

The fact sheet further indicated that there may be more expansive tariffs on semiconductors and related products soon, adding another layer of uncertainty for the sector.

Korean Semiconductor Manufacturers at Risk

This announcement has led South Korean semiconductor firms to evaluate their vulnerability. The AI accelerators targeted utilize high-bandwidth memory (HBM3E) provided by SK hynix and Samsung Electronics.

However, industry experts assert that the immediate impact on Korean memory producers will be limited since most memory chips are not shipped directly to the U.S. Instead, they are delivered to original equipment manufacturers (OEMs) in countries like Taiwan for integration into completed products before reaching the U.S. market.

One industry official remarked, “Memory suppliers lack clear visibility into their chips' final destinations,” noting that these tariff matters are primarily addressed by chipset manufacturers, such as Nvidia, rather than memory suppliers.

Moreover, South Korea enjoys most favored nation (MFN) status regarding chip exports to the U.S. Following a trade agreement made between Trump and South Korean President Lee Jae Myung in November, Seoul was reassured it would not face unfair tariffs on chip exports.

Market Concerns Amid Cost Pressures

Although the direct exposure is limited, analysts caution that elevated tariffs on firms like Nvidia could send shockwaves through the supply chain, as manufacturers attempt to transfer increased costs down to component suppliers.

Micron, based in the U.S., may experience short-term ramifications due to its extensive global manufacturing capabilities. Nonetheless, as the policy aims to support the U.S. semiconductor sector, some experts speculate it could reconfigure the market favorably for Micron in the long run.

“The future remains highly uncertain,” stated another industry official, emphasizing Trump’s history of fluctuating tariff policies that complicate long-term impact assessments for companies.

Response from South Korea

In light of this, Trade Minister Yeo Han-koo has extended his trip to the U.S. to analyze the potential ramifications of the tariff on South Korea’s semiconductor industry closely.

The Ministry of Trade, Industry and Resources convened an emergency meeting and pledged to make every effort to mitigate the impact while ensuring ongoing communication with relevant industries.