Seoul: As Donald Trump took office for his second term as US president, South Korean industries were closely watching for potential changes in Washington’s economic and trade policies, which could significantly impact their American businesses, industry observers said on Tuesday.
While concerns abound over possible rollbacks of key U.S. legislation, such as the CHIPS and Science Act and the Inflation Reduction Act (IRA), some sectors anticipate opportunities for deeper collaboration with the United States, particularly in shipbuilding, reports Yonhap news agency.
South Korean tech giants Samsung Electronics Co. and SK hynix Inc. are grappling with uncertainties over the CHIPS Act, which provides subsidies to semiconductor companies.
Both firms have announced major U.S. investments — Samsung with a US$17 billion semiconductor plant in Texas and SK hynix with a $3.87 billion advanced packaging plant for artificial intelligence (AI) memory chips in Indiana.
Samsung and SK hynix have secured pledges of $6.4 billion and $450 million, respectively, in grants from the U.S. for their investments in the country.
Despite bipartisan support for the CHIPS Act during its passage, industry experts caution that executive actions under the new Trump administration could alter its implementation, potentially affecting the subsidies.
Battery manufacturers face similar concerns under the IRA. Companies such as LG Energy Solution Ltd. and SK On Co., which heavily rely on IRA tax credits to sustain profitability, could see their margins squeezed if the legislation is scaled back.
In the third quarter alone, LG Energy Solution received 466 billion won (US$321.2 million) and SK On 60.8 billion won in IRA-related tax benefits. Without such benefits, both companies would effectively be operating at a loss.
Some industry watchers in South Korea believe the complete repeal of the IRA is unlikely, but say the eligibility requirements for subsidies received by battery companies could face significant changes.
Koo Ja-min, an attorney at Covington & Burling LLP and a member of the IRA advisory team of the Korea Battery Industry Association, said in a recent seminar in Seoul, “It would be difficult to pass a bill repealing the IRA.”
He highlighted that the IRA has driven over $100 billion in clean energy investments and created more than 100,000 jobs in districts largely represented by Republicans. “Of the top 10 districts receiving the most IRA-related investments, eight are Republican-led,” he explained.
Trump’s campaign hinted at rolling back federal mandates for electric vehicles (EVs), a move that could slow South Korean automakers’ EV exports. Hyundai Motor Group, which holds the second-largest market share for EVs in the U.S. after Tesla, could face significant challenges in expanding its foothold.
South Korea’s shipbuilding industry, meanwhile, sees Trump’s return to power as an opportunity. During a phone conversation with South Korean President Yoon Suk Yeol following his election in November, Trump expressed interest in collaborating with South Korean shipyards, particularly in naval shipbuilding, repairs and maintenance.
While South Korea had long held the top spot in shipbuilding orders, China overtook it in recent years, claiming 60 percent of the global market share in 2023.
“South Korean businesses are closely monitoring these developments, as they could introduce additional costs and disrupt supply chains, particularly for key industries like automotive, electronics and steel,” an official at the Korea International Trade Association said.
(IANS)
