South Korean, Taiwanese chipmakers without American factories face 100% tariffs

The United States government has escalated its campaign to revitalize domestic semiconductor manufacturing by threatening to impose tariffs of up to 100% on imported chips from foreign producers that do not build significant production capacity on American soil.

US Commerce Secretary Howard Lutnick stressed the Trump administration’s intensified efforts to attract more foreign investment in a statement dated January 17, informing chip makers based in South Korea and Taiwan to allocate a significant amount of funds to the US for investments or face a massive tariff rate of 100% on their imports to the country.

An exception to this tariff rate applies to the company increasing its product in the United States.

During a groundbreaking ceremony for a new Micron Technology Inc. facility near Syracuse, New York, the Secretary of Commerce stated that potential tariffs envisioned in a trade deal with Taiwan might also bring about significant effects on South Korean chipmakers. 

Following this statement, reporters reached out to Lutnick seeking clarity on this move. Responding to this, the industry executive highlighted that “Anyone who wants to manufacture memory has two options: They can either pay a 100% tariff or build their operations in America,” adding that “That’s what we call industrial policy,” without specifically mentioning the firms.

His remarks aligned with a warning issued on Thursday, January 15, which offered lower tariff rates on imports for foreign companies that expand manufacturing in the US. Notably, this decision came after the Taiwan trade deal was signed.

Still, Lutnick kept insisting that if these companies do not comply with this warning, they will face a 100% tariff on imports to the US.

Foreign chip makers express heightened worries about Trump’s tariff decision 

As of now, US President Donald Trump has delayed the imposition of tariffs on imported semiconductors, primarily from Taiwan and South Korea, as he gives Lutnick and Jamieson Greer, the United States trade representative, time to strike a deal with trade partners to reduce US reliance on foreign semiconductors.

In the meantime, the White House hinted that Trump will soon announce new tariff rates and an incentive program designed to foster and expand local manufacturing.

Notably, Micron rivals the world’s two largest memory chip manufacturers, Samsung Electronics Co. and SK Hynix Inc. These companies are considered South Korean giants vying for market leadership in the high-bandwidth memory (HBM) chip market. These chips are key elements for running data center processors, fueling the AI boom.

These three global manufacturing firms have recently raised concerns about limited chip supplies amid a surge in AI data center development. 

Regarding the Trump administration’s recent move, a Commerce Department representative elaborated that “Secretary Lutnick is dedicated to bringing back American manufacturing strength, starting with semiconductors.”

However, when reporters requested comments from SK Hynix, Samsung, and Taiwan’s representative office in Washington, D.C., they declined to respond. 

Trump’s tariff policies spark uncertainties in the market 

Regarding the US-Taiwan trade agreement made public on Thursday, reports indicated that the deal gives Taiwanese firms establishing a local presence in the US the chance to import up to 2.5 times their current production capacity tariff-free during the construction phase.

Interestingly, shipments that exceed this limit will be subject to a reduced tariff rate. Upon the completion of these production facilities, the cap will decline to 1.5 times for their current production capacity

In the meantime, under this deal, which imposes a 15% tariff on Taiwan’s imported goods, the Asian tech industry vowed to make significant investments of at least $250 million in the US. 

Apart from this pledge, Taiwan Semiconductor Manufacturing Co., the world’s largest and most advanced dedicated contract chip manufacturer, made clear its intentions to develop at least four more manufacturing facilities in Arizona, a US state. This project is expected to consume an additional $100 billion in funding, sources close to the situation said, who wished to remain anonymous.

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