South Korea Projects Stability Amidst New US Advanced Chip Tariffs
Seoul, Saturday 17 January 2026
Seoul dismisses immediate alarm as vital memory chip exports escape Washington’s 25% AI processor levy, despite looming threats of 100% tariffs for manufacturers failing to invest in American production.
Initial Assessment: Caution Over Alarm
Following the proclamation signed by US President Donald Trump on Wednesday, 14 January, South Korean officials have moved quickly to assess the exposure of their domestic semiconductor industry [1][2]. In a statement released on Saturday, 17 January, South Korean Trade Minister Yeo Han-koo confirmed that the immediate impact on the nation’s chipmakers appears limited [1]. The new 25% tariff specifically targets advanced artificial intelligence processors, such as Nvidia’s H200 and AMD’s MI325X, rather than the memory chips that constitute the bulk of South Korea’s semiconductor exports, such as those produced by Samsung and SK Hynix [1][2]. While the government remains cautious regarding potential future phases of these trade measures, the exclusion of memory chips has provided a temporary reprieve for Seoul’s tech giants [1].
The “Invest or Pay” Ultimatum
While the current tariffs may be contained, the rhetoric from Washington signals a more aggressive long-term posture. On Friday, 16 January, US Commerce Secretary Howard Lutnick issued a stark warning to international chipmakers: companies failing to invest in American production could face tariffs as high as 100% [1][2]. Speaking at a groundbreaking ceremony for a new Micron plant outside Syracuse, New York, Lutnick made it clear that South Korean and Taiwanese firms must commit to increased production on US soil to avoid punitive levies [1]. This escalation prompted the South Korean government to convene an emergency meeting on 15 January, chaired by Minister of Industry, Trade and Energy Kim Jung-kwan, to discuss countermeasures and minimise negative impacts on the domestic supply chain [3].
Taiwan’s Strategic Pivot and Global Alignment
The pressure to localise manufacturing in the US has already yielded significant results elsewhere in the region. On Thursday evening, the US Department of Commerce confirmed a major trade deal with Taiwan, reducing import tariffs on Taiwanese goods from 20% to 15% [4]. This represents a reduction of -25 per cent in tariff costs for Taiwanese exporters. In exchange, Taiwanese semiconductor companies have committed to increasing their investment in US operations by $500 billion, with $250 billion earmarked for direct investments in advanced production and innovation capacity across semiconductors, energy, and AI [4].