Inside one of South Korea’s leading semiconductor research institutes, the cleanrooms and workshops operate with meticulous precision, yet outside, a tumultuous geopolitical climate is brewing. Recently, the U.S. government announced a national security investigation into semiconductor imports, raising the spectre of new tariffs under policies reminiscent of former President Donald Trump’s administration. This move threatens to disrupt the crucial semiconductor industry in South Korea and Taiwan, with potential implications for the global technology landscape.
As two of the world’s foremost chipmaking nations, South Korea and Taiwan are acutely aware of the high stakes. South Korea is home to giants like Samsung Electronics and SK Hynix, while Taiwan hosts the renowned TSMC, the world’s largest contract chipmaker. Together, they produce a significant portion of the advanced chips vital for various sectors, from consumer electronics to defence systems. In 2024, Taiwan’s semiconductor exports to the U.S. reached a staggering $7.4 billion, while South Korea’s soared to an all-time high of $10.7 billion.
The looming threat of tariffs has ignited stockpiling among manufacturers, with concerns that such levies could inflate consumer prices and dampen demand. An engineer from MediaTek expressed frustration, stating that the suggested relocations of TSMC’s production to the U.S. resemble “paying protection money,” arguing that such projects tend to yield slim profit margins in America’s high-cost environment. This assessment underscores the strategic significance of the semiconductor industry, not just for economic stability but as a matter of national concern, particularly for Taiwan.
Experts have indicated that any tariffs imposed might not operate under a broad framework but could target specific products, including High Bandwidth Memory (HBM) and Dynamic Random Access Memory (DRAM), essential for high-speed computing. Such targeted tariffs could deliver a significant blow to companies like Samsung and SK Hynix, who rely heavily on indirect exports routed through countries like China and Vietnam. The complicating factor here is the intricate global supply chain that these companies have built, which would be rattled by any drastic changes in U.S. trade policy.
Recent data illustrates the urgency of the situation. In April 2025, Taiwan’s exports surged by nearly 30% year-on-year as manufacturers rushed to stockpile tech components ahead of anticipated tariffs. This surge became evident across major tech firms, including TSMC, which gained from bolstered demand influenced by advancements in artificial intelligence. However, while the semiconductor sector may currently be shielded from immediate tariff repercussions due to its unique demand dynamics, the uncertainty surrounding U.S. trade policies remains a significant concern for supply chain stability.
In response to these challenges, South Korea’s government has announced a financial aid package aimed at supporting small and medium-sized enterprises (SMEs) that might be adversely affected by U.S. tariffs. This 4.6 trillion won (approx. $3.25 billion) initiative is designed to alleviate logistics costs and help SMEs expand their export markets, reflecting a proactive approach to mitigate economic fallout. Although these SMEs represent a modest 17% of South Korea’s total exports, their significant vulnerability to rising costs imposed by tariffs highlights the potential broader economic implications.
The negotiation table will be critical in the coming weeks. The U.S. Trade Representative is expected to meet with South Korean officials to discuss these contentious trade issues further. Experts suggest that while there may be short-term easing for specific products due to their essential nature and strong market demand, a long-term solution will require careful navigation of the shifting landscape.
In addition to addressing trade issues, firms like Foxconn, a major player in electronics manufacturing, express caution regarding currency fluctuations and trade tensions. Following a strong financial start to the year, the company has recently adjusted its revenue forecasts, reflecting the unpredictable nature of the geopolitical climate impacting global supply chains.
As these nations navigate the complexities surrounding tariffs and trade relationships, the overarching themes of national security and economic stability will remain at the forefront. With semiconductor manufacturing holding profound strategic significance, both South Korea and Taiwan seem firmly committed to maintaining their production capabilities, even in the face of increased pressure from the U.S. government. As the situation develops, the potential reshaping of global supply chains could redefine the landscape of international trade for years to come.
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Source: Noah Wire Services
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