South Korea boosts semiconductor investment amid US trade tensions

On April 15, 2025, South Korea announced significant investment plans aimed at bolstering its semiconductor industry amid growing anxiety over potential US tariffs. The South Korean government revealed that it would increase its total investment in the semiconductor sector from 26 trillion won to 33 trillion won. This decision highlights the country’s recognition of the uncertainties surrounding trade relations with the United States, particularly as they pertain to the semiconductor and automotive sectors. The announcement stated that over 4 trillion won would be allocated through fiscal spending until 2026, aimed at supporting local firms in navigating developing challenges in global trade dynamics. The finance ministry emphasized the importance of this aggressive fiscal investment plan as South Korea is a major exporter to the United States, and any increase in tariffs would significantly impact its economy. The semiconductor industry is particularly crucial, given that it comprises key players like Samsung and SK Hynix, whose shares have been negatively affected by recent tariff concerns. Finance Minister Choi Sang-mok noted that the planned support will include infrastructure improvements, such as the development of underground transmission lines at semiconductor clusters. As market uncertainty grows, South Korea faces mounting pressures to enhance the competitiveness of its semiconductor sector. Last week, the country had already unveiled a separate $2 billion emergency package aimed at assisting car manufacturers affected by the looming tariffs. As a result, the government is seeking to create a dynamic, private sector-led ecosystem for semiconductor innovation and growth within the nation. The planned investment underscores South Korea's commitment to maintaining its leadership in the global semiconductor market. Despite these challenges, analysts suggest that South Korea's semiconductor sector may fare better than its automotive sector due to the unique position of semiconductors in the U.S. market. As Kim Dae-jong from Sejong University pointed out, America currently lacks viable substitutes for imported semiconductors, which may offer South Korea leverage in ongoing negotiations. With trade talks anticipated next week, there is hope for resolution and continued collaboration that would benefit both countries economically. This situation underscores the ongoing tensions in trade and the importance of active negotiation to mitigate potential adverse effects on both economies.