Park Jae-hyuk
Monday (local time) in Washington at the White House, U.S. President Donald Trump greets TSMC CEO C.C. Wei with a handshake following Wei's announcement that the company would invest an additional $100 billion in Arizona over the next four years. Reuters-Yonhap

American `Made' Pressure Gives Headache to Local Firms

The size of TSMC’s investment is forcing Samsung Electronics and SK hynix to consider whether they need to do equal investments, which is now more pressing due to the threat of increased tariffs by United States President Donald Trump amid his increasing threats against his trade allies about tariffs and other economic penalties.

TSMC has decided to add $100 billion more to Arizona over four years, even though Washington does not chip in any money. This is to be the biggest investment from a single foreign entity into the country and there were no federal subsidies. That number comes on top of the $65 billion already promised by TSMC to build three factories in the state.

Now they have a choice, to “manufacture in America” or “face the music,” as the most recent move by the Taiwanese chipmaker has only strengthened Trump’s conviction that his tariffs work better than the previous administration's approach to disillusion the subsidy game here and push for investment from abroad.

"Here, we are watching the effects of the presidency of Donald Trump about TSMC, the leading chip manufacturer globally, making a $100 billion investment in America. That could happen because they were capable of coming here without tariffs," U.S. Commerce Secretary Howard Lutnick said this at the White House, during a press conference Monday, local time.

During the presser with Wei, Trump said the approach taken by the Taiwanese company itself to invest relates to national security. Answering a question on whether this step could reduce impacts on the U.S. in case China were to attempt to isolate or take over Taiwan, Trump remarked that indeed, that would be a "catastrophic event," but it would also be noted that that put the U.S. in a much better position.

His remarks would crank up the heat on the Korean chipmakers as he has hinted at an offer to impose semiconductor tariffs at above 25 percent and further mentioned the slashing of subsidies for firms working in his country. There are, again, hints that he might bundle investment issues with security concerns and ask the Korean government to contribute more to the cause of the United States of America Forces in Korea.

Construction of the Samsung Electronics semiconductor fab in Taylor, Texas begins on February 14. Photo: Samsung Electronics.

He seems to be ‘threatening’ to block Samsung Electronics and SK hynix from obtaining the subsidies set by his predecessor unless they up their investment in the country, said a semiconductor industry official.

Sang-sik Chang, director of the Institute for International Trade at the Korea International Trade Association, stated that "the U.S. may opt to be less willing to give an incentive for foreign investments, though the subsidies applied by the Joe Biden government to Samsung Electronics and SK hynix are within the law until proven otherwise."

He urged the U.S. government to "take steps to ensure that the U.S. fulfills its promise because an executive order by Trump could be used to obstruct foreign companies from using subsidies for their investments.
Tae-Won Chey, Chairman of SK Group, had also called last month for additional incentives by Washington to companies from Korea wanting to invest more in the United States.

Issues have been raised by Taiwanese press about the comments made by Trump, expressing that it does not give adequate security assurances. They compared the investment by TSMC with the Budapest Memorandum on Security Assurances, signed by Ukraine in 1994 to ensure its territorial integrity and political independence in exchange for abandonment of its nuclear arsenal. This memorandum is seen as having facilitated Russia's invasion of Ukraine in 2022.

"The bargaining power of Silicon Shield is slowly diminishing," Commercial Times says. It does not speak well for the shareholders either.

Industry minister asks U.S. to please put Korea into the new tariff plan. Will all the companies from Korea please leave Mexico and Canada? Mexican, and Canadian, tariffs.

Additionally, Samsung and SK confront the necessity of an aggressive decision over the possible relocation of their factories in Mexico and Canada, after the United States, on a Tuesday local time announcement, implemented 25 percent tariffs on the import countries of these two neighboring countries.

Samsung Electronics is considering producing its own laundry dryers in the US state of South Carolina instead of assembling Samsung, SK Group’s battery production division, is collaborating with EcoPro, a Korean battery company, on the establishment of a cathode material facility in Quebec, Canada.

With the possibility of the U.S. entering into accords with Mexico and Canada, Korean companies can hardly find their way to decide on the direction of their North American operations.